China softens tone on bitcoin, calling it an 'investment alternative' after years of cracking down on crypto

• China called bitcoin an "investment alternative" after years of cracking down on the popular cryptocurrency, CNBC first reported.
• Beijing insiders found the comment "progressive."
• The move comes after Turkey's central bank barred the use of cryptocurrencies as a method of payment starting April 30.

China pivoted in its stance on bitcoin on Sunday, calling the digital asset an "investment alternative" - a comment that Beijing insiders described as "progressive" - after years of cracking down on cryptocurrencies, CNBC first reported.

"We regard bitcoin and stablecoin as crypto assets ...These are investment alternatives," said Li Bo, deputy governor of the People's Bank of China, during the Boao Forum for Asia, a panel hosted by CNBC on Sunday.

"They are not currency per se. And so the main role we see for crypto assets going forward, the main role is investment alternative."

China in 2017 shuttered its cryptocurrency exchanges and banned initial coin offerings, which had been a new way for startups to raise funds by generating their own virtual currencies.

As investment alternatives, "many countries, including China, are still looking into it and thinking about what kind of regulatory requirements, maybe minimal, but we need to have some kind of regulatory requirement to prevent ...the speculation of such assets to create any serious financial stability risks," Li said.

While the move was a pivot for China, Edward Moya, senior equity analyst at OANDA, said that it was not that surprising.

"China needed a more relaxed stance on bitcoin to support the eventual launch of their digital coin," he told Insider. "China's cyber yuan is progressing and it looks like China will win the central bank race to launch a digital coin."

The Asian superpower is already at the point of extensive pilot testing, according to a new Citi report this month entitled Future of Money. China began developing its digital currency electronic payment - a form of central bank digital currency - in 2014 and tested a pilot in 2020. Citi said it expects China's "sprint to a cashless society" within five years.

China's softening stance comes after Turkey's central bank barred the use of cryptocurrencies as a method of payment starting April 30. The move stoked fears that other nations may follow suit.

Moya added that the biggest risk for bitcoin in the coming months are harsh restrictions or government shutdowns in a bid to thwart individuals who use cryptocurrencies to finance terrorism or facilitate money laundering, among other illicit uses.

"New regulatory requirements will happen, it is just unclear exactly in what form they will take," he said.

Bitcoin last week hit an all-time high of over $64,000 on excitement over Coinbase's direct listing. Over the weekend, the world's largest cryptocurrency by market capitalization slipped 17% to its lowest since February but recovered on Monday, regaining some stability.