China has announced that it will lift its ban on cryptocurrency trading and mining, effective from January 1, 2024. The decision comes after a massive rally in the crypto market, which has seen the combined value of all cryptocurrencies surpass $16 trillion for the first time.
China, which was once the world’s largest crypto market, had imposed a series of crackdowns on the industry since 2017, citing concerns over financial stability, environmental impact and social order. The ban had forced many crypto exchanges, miners and investors to relocate to other countries or operate underground.
However, in a statement released by the People’s Bank of China (PBOC), the central bank said that it has recognized the potential of crypto assets as a new form of digital innovation and a catalyst for economic growth. The PBOC said that it will adopt a “prudent and balanced” approach to regulate the crypto sector, and will work with other authorities to establish a legal framework and a supervision system.
The PBOC also said that it will continue to support the development of its own digital currency, the digital yuan, which is expected to launch in 2024 as well. The digital yuan is designed to complement the existing fiat currency system and to enhance the efficiency and security of cross-border payments.
The announcement has been welcomed by the crypto community, which sees China’s reversal as a major boost for the global adoption and legitimacy of crypto assets. Many analysts predict that China’s entry into the crypto market will create more demand and competition, and will drive the prices of bitcoin, ethereum, XRP and solana even higher in the coming months.