Central Bank Official Defines Bitcoin: Digital Currency and Assets Must Serve the Real Economy

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The role of digital currencies and digital assets in the modern financial system has come under renewed scrutiny following key remarks from senior Chinese central bank officials at the 2021 Boao Forum for Asia. In a landmark discussion on “Digital Payments and Digital Currencies,” PBOC Vice Governor Li Bo offered the central bank’s clearest definition yet of Bitcoin—positioning it not as legal tender, but as an alternative investment vehicle. The event reignited debate over the future of cryptocurrencies, regulatory frameworks, and how digital innovations can best support real-world economic activity.

This article explores the implications of these statements, unpacks the distinction between digital currency and digital assets, and examines how blockchain technology can contribute to economic development—while addressing risks and regulatory challenges.

Bitcoin Is Not Legal Tender: A Regulatory Clarification

At the Boao Forum, Vice Governor Li Bo made a significant clarification: Bitcoin and stablecoins are not currencies, but rather fall under the category of cryptographic assets used primarily for investment purposes. This aligns with China’s long-standing position that virtual currencies lack legal tender status and should not circulate as money.

“Globally, Bitcoin or stablecoins are emerging as alternative investment options, but they are not money,” Li stated.

This definition reinforces previous guidance issued by the People's Bank of China (PBOC) and other regulatory bodies. As early as 2017, seven Chinese government agencies jointly declared that tokens and so-called “virtual currencies” do not possess legal tender status, cannot be issued by monetary authorities, and should not function as payment instruments in the market.

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The announcement comes amid heightened market volatility. On April 18, 2021, Bitcoin plunged over 10%, briefly dropping below $54,000—a sharp decline that triggered broad sell-offs across Ethereum and other major cryptocurrencies. Such fluctuations underscore the speculative nature of these assets and validate concerns about financial stability.

Regulatory Challenges and Financial Risk Mitigation

While blockchain technology offers transformative potential, experts warn that cryptographic assets pose serious regulatory and systemic risks.

Zheng Dingxiang, President of the Shenzhen Blockchain Association for Information Services, emphasized two core challenges:

Dr. Zheng Lei, Chief Economist at Baoxin Finance, added that while global attitudes toward Bitcoin vary, all governments recognize its regulatory complexity. He stressed the need for risk controls at the exchange level—including Know Your Customer (KYC) protocols, monitoring of speculative trading, and cooperation with law enforcement to freeze suspicious accounts.

“If a stablecoin aims to become a widely adopted payment tool,” Li Bo noted, “it must be subject to the same rigorous regulation as banks or quasi-banking institutions.”

This suggests a clear policy threshold: innovation is welcome—but only if it operates within a transparent, regulated framework that protects consumers and maintains macroeconomic stability.

Digital RMB: Progress Without a Deadline

Unlike decentralized cryptocurrencies, China’s digital yuan (e-CNY) is a central bank digital currency (CBDC) designed to modernize domestic payments and eventually support cross-border transactions.

According to former PBOC Governor Zhou Xiaochuan, the initial motivation behind e-CNY was retail-focused: creating a faster, cheaper, and more efficient payment infrastructure for China’s 1.4 billion consumers—not advancing financialization or internationalization.

Li Bo confirmed that there is no official timeline for nationwide rollout. Before full deployment, three critical tasks must be completed:

  1. Expand pilot programs to more cities and use cases.
  2. Strengthen technical infrastructure, ensuring security, scalability, and reliability.
  3. Establish legal and regulatory frameworks governing issuance, usage, and compliance.

Pilots have already expanded beyond consumer spending into enterprise and government applications—from salary disbursements to social welfare distribution. Experts predict future integration with supply chain finance, rural financial inclusion initiatives, and even cross-border trade settlements.

Liu Bin, Financial Research Director at the China (Shanghai) Pilot Free Trade Zone Institute, observed that trials are evolving from offline retail to hybrid online-offline models, involving increasingly diverse institutions—from commercial banks to fintech platforms.

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Rooted in Reality: Why Digital Assets Must Serve the Real Economy

Zhou Xiaochuan reiterated a foundational principle: both digital currencies and digital assets must ultimately serve the real economy—not just speculative markets.

This philosophy guides China’s approach to financial innovation. As Dr. Zheng Lei explained, we are now in the digital economy era, where production, consumption, and investment are increasingly digitized. In this context:

For example, Su Xizhi Research Institute expert Su Xirui highlighted how digital RMB could extend financial services to rural areas, supporting agriculture (the “three rurals”) and small businesses often excluded from traditional banking.

Moreover, digital RMB’s features—such as controllable anonymity and transaction immutability—can strengthen supply chain ecosystems by improving transparency and trust among participants. This boosts creditworthiness for small and medium enterprises (SMEs), enabling better access to financing.

Unlocking Value Through Tokenization

Huobi University President Yu Jia’ning pointed out that blockchain-based assets go beyond speculation—they can revitalize real economic sectors through tokenization.

Consider intellectual property: copyrights are often underutilized due to unclear ownership and low liquidity. When tokenized on a blockchain:

This transforms passive assets into dynamic capital instruments—directly benefiting creators and innovators.

Chen Xiaohua, Chief Digital Economist at the China Mobile Communications Association Blockchain Committee, cautioned however that virtual currencies’ speed, irreversibility, and complex transaction patterns increase money laundering risks—reinforcing the need for robust anti-financial crime safeguards.

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Frequently Asked Questions (FAQ)

Q: Is Bitcoin legal in China?
A: While owning Bitcoin is not explicitly illegal, financial institutions are prohibited from handling crypto transactions. Trading and mining are heavily restricted under current regulations.

Q: Can digital RMB be used internationally?
A: Not yet. The current focus is domestic adoption. International use may develop gradually, especially during events like the Beijing Winter Olympics where foreign visitors can test the system.

Q: How does digital RMB differ from Alipay or WeChat Pay?
A: Digital RMB is sovereign currency issued by the central bank; Alipay/WeChat are third-party payment platforms that hold users’ bank money. E-CNY works offline and offers stronger privacy controls.

Q: Are stablecoins banned in China?
A: Private stablecoins are not permitted as payment tools. Any stablecoin aiming for broad usage would need full regulatory compliance equivalent to banking institutions.

Q: What is the main advantage of tokenizing real-world assets?
A: Tokenization increases liquidity, reduces transaction costs, enhances transparency, and opens new financing avenues—especially for SMEs and creative industries.

Q: Will non-bank companies participate in digital RMB distribution?
A: Yes. Experts anticipate that fintech firms and high-traffic digital platforms may eventually join the ecosystem as service providers alongside traditional banks.

Core Keywords:

By grounding digital finance in tangible economic value—and balancing innovation with oversight—China’s approach offers a model for responsible technological advancement in the era of digital transformation.