3 Reasons China Should Overturn Bitcoin Ban (Opinion)

China's economy grew 5.2 percent in 2023, but the stock market fell 10 percent for the year. Meanwhile, some Chinese investors sought refuge in cryptocurrency despite the government's ban on Bitcoin.

These brave souls were not unpatriotic, nor was their investment in Bitcoin against the fundamental principles of Chinese Communism. In fact, most of the world's governments are slow to catch on: Bitcoin represents a store of value that transcends borders or political ideology.

Here are three reasons why China should lift the Bitcoin ban

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Strong Chinese interest despite Bitcoin ban

China's GDP grew by 5.2% in 2023, but the stock market was the world's worst-performing equity market with a 10% fall (compared to a 25% rise in the US S&P 500 Index).

As a result, the illegal Bitcoin trade in China increased to $86 billion worth of transactions last year. Chinese investors were exiting the troubled market for Chinese stocks.

Some Chinese see Bitcoin as a safe haven for gold. “Bitcoin is a safe haven like gold,” Dylan Run, a Shanghai-based financial sector executive, told Reuters recently.

China is suitable for Bitcoin

Not only is China home to lower industrial energy costs than coal-fired power plants, which is great for Bitcoin miners, but it's also the closest to getting the silicon chips used to make ASICs these days.

Strategic competition/partnership with the US

The US and China are global strategic rivals and allies geopolitically, militarily and economically. China cannot allow the US and Europe to control Bitcoin ownership rates and hash rates without paying a heavy price in opportunity cost.

If the U.S. dollar loses its global supremacy to borderless cryptocurrencies in the next two decades, China will not be able to access the dollar's high leverage for foreign industries.

If he allows Chinese nationals like Dylan Run to invest in Bitcoin, some of the losses will be offset by the disruptive industry he creates.