China may unleash Bitcoin supercycle if it allows crypto trading, says ex-UBS banker

If Beijing permits its citizens to trade under strict regulations, China could ignite a fresh Bitcoin supercycle, according to former UBS banker Joseph Chee, who did not provide a timeline.

Chee, who previously headed Asia investment banking at UBS, currently serves as the head of Solana Company, a Nasdaq-listed entity that uses the Solana (SOL) token as its treasury asset.

Hong Kong Is China’s Crypto Test Run

Digital asset trading remains prohibited on the Chinese mainland. In February, the People's Bank of China (PBOC), along with seven other agencies, reaffirmed that ban and required prior government approval for stablecoins.

During an appearance on CNBC's Squawk Box Asia, the former UBS executive noted that Beijing monitors the technology closely via think tanks and academic researchers.

Chee stated that officials are employing Hong Kong as a testing ground for how crypto can be deployed and regulated.

“When the Chinese government find a way to manage this and allow access to trading crypto… I think the crypto is going to go through another super cycle,” Chee stated.

He further commented that, at present, Beijing might not permit trading or onshore issuance of stablecoins — digital tokens tied to a currency like the US dollar.

What’s Stopping China From Reopening Crypto Trading?

Chee identified two obstacles.

• The first hurdle is that the regulators who would oversee the market must first understand it.
• The primary concern, according to Chee, is capital flight — money flowing out of the country. China maintains capital controls that limit such outflows.

Chee's remarks coincide with internal pressures that are forcing China to close lenders at an unprecedented rate. Specifically, the country recorded 670 rural bank closures in the most recent annual count as non-performing loans increase.

In May, BeInCrypto reported that a crackdown on mainland offshore brokers could drive traders toward dollar-pegged tokens to transfer funds.

Chee stated that price volatility, historically a concern for the PBOC, is likely to persist.

In the meantime, the Hong Kong government and the Securities and Futures Commission (SFC) intend to introduce a bill this year that would license crypto dealers, custodians, advisers and fund managers.

Christopher Hui, Hong Kong's Secretary for Financial Services and the Treasury, reiterated that goal in a June response to legislators. The city granted licenses to two bank-backed stablecoin issuers in April, and its maiden Hong Kong stablecoin became operational in August.

The central government in Beijing has not declared any intention to extend these measures to the mainland.