China has not officially abandoned its restrictive stance on cryptocurrencies, but it continues to monitor their development. Joseph Chee, CEO and Chairman of Solana Company, believes that Beijing is closely watching digital assets and blockchain while remaining concerned about the risks they pose to the public. Hong Kong, he says, serves in particular as a testing ground for assessing the potential uses of these technologies.
In an interview with CNBC, Joseph Chee described a situation more nuanced than a simple rejection of cryptocurrencies. According to the executive, think tanks, academics, and other Chinese stakeholders have an in-depth understanding of these tools. The technology is therefore being closely monitored, even as the authorities continue to express reservations about its uses and consequences.
A former head of UBS’s investment banking business in Asia, Chee worked on Chinese markets for many years. He believes that the authorities are particularly concerned about the risk of individuals being vulnerable to fraud, financial losses, or products they do not understand. However, this caution does not mean that China can afford to ignore the sector’s developments indefinitely.
Close monitoring despite restrictions
The distinction between cryptocurrencies and blockchain technology is essential to understanding China’s position. The authorities can restrict the trading of digital assets and the issuance of stablecoins while examining distributed ledger applications for businesses or government agencies. This approach makes it possible to study the tools without necessarily authorizing their widespread use as financial instruments.
Blockchain relies on mechanisms for recording and verifying transactions shared among multiple participants. Its performance and features vary from one network to another, as explained in this overview of blockchain speed and its place in the world of cryptocurrencies. For policymakers, one key challenge is determining which uses can be regulated, secured, and adapted to existing infrastructure.
Hong Kong, a testing ground for digital assets
According to Chee, Hong Kong plays a particular role in the study of cryptocurrency-related models. The city has become an important hub for digital assets, attracting companies, capital, and specialized expertise. Its environment allows the Chinese authorities to monitor the development of certain regulatory and commercial frameworks, without this amounting to a general opening of the mainland market.
This separation between Hong Kong and the mainland provides a limited framework for experimentation. Businesses can develop digital asset-related activities there in a specific environment, while restrictions remain in force in mainland China. Beijing can thus observe practices, operational risks, and market reactions before considering possible changes to its own approach.
The broader economic context also matters. China’s technology choices are part of a strategy involving international trade, infrastructure, and competitiveness. Developments in Chinese foreign trade illustrate the importance, for the country, of mastering tools that could support commercial and financial activities, without opening the cryptocurrency sector to unchecked activity.
Educating people before expanding use
For Joseph Chee, education is an important step before any broader deployment. Those responsible for overseeing or using these technologies need to understand how they work, their limitations, and the associated risks. This training applies to government agencies, businesses, and users who may interact with digital services alike.
The issue is not limited to knowing how to buy or hold an asset. It also involves wallet security, transaction verification, data protection, and understanding automated systems. Digital tools can facilitate certain operations, but misinterpreting their functions can expose users to errors or manipulation. Debates about the effects of artificial intelligence at work, such as the one discussed in this article on AI’s impact on careers, show how important guidance and technological literacy are to adoption.
The rapid spread of information adds another challenge. On social media, automated content or content created with the help of digital tools can influence perceptions of a technology and its promises. This issue is explored through the phenomenon of artificial intelligence being used as an influencer. In the crypto space, misleading information or promises of returns can also make it harder to protect individuals.
Restrictions remain in place in mainland China
Interest in blockchain does not mean that the Chinese authorities have lifted restrictions on cryptocurrencies. Between 2013 and 2021, Beijing progressively tightened measures governing the sector. In September 2021, the People’s Bank of China declared digital asset transaction-related activities illegal. Foreign-based service providers are also prohibited from offering these services to Chinese citizens.
The central bank reaffirmed the enforcement of this legislation the following year. Its concerns focused in particular on dollar-backed stablecoins, which can facilitate transfers of value outside traditional financial channels. The authorities are especially concerned about the risks associated with speculation, money laundering, and capital flows that would be more difficult for them to control.
At the same time, China is prioritizing the development of the digital yuan, its central bank digital currency. Unlike a decentralized cryptocurrency, a public digital currency is directly controlled by the state and forms part of the national monetary system. This approach allows Beijing to explore digital payments while retaining institutional control over the issuance and circulation of money.
A selective approach rather than an immediate opening
Chee’s remarks suggest a potentially selective strategy: maintain barriers around cryptocurrency trading while assessing blockchain applications in commercial or administrative operations. Such an approach would not amount to legalizing digital assets. Rather, it would reflect a desire to distinguish technological infrastructure from the speculative markets that have developed around certain tokens.
This caution is part of an international context in which governments are seeking ways to regulate digital assets, repatriate capital, or strengthen regulatory oversight. In Kazakhstan, for example, an amnesty initiative was presented as a way to bring digital assets held abroad back into the country, a measure described in this article on Kazakhstan’s crypto amnesty. Responses vary according to national priorities, but they reflect growing state interest in the traceability and management of digital flows.
For China, the question is therefore less whether blockchain can be ignored than under what conditions it could be used. Regulation of platforms, protection of individuals, financial stability, and control over payments are likely to remain central to any deliberations. Hong Kong offers a distinct vantage point, while the digital yuan continues along a path overseen by Chinese institutions.
