China’s BSN chair calls Bitcoin Ponzi, stablecoins ‘fine if regulated’

Published at: June 27, 2022

Amid the Chinese government continuing to celebrate the massive decline of cryptocurrency markets this year, one key local blockchain expert has referred to crypto as a Ponzi scheme.

Yifan He, CEO of Red Date Technology — a major tech firm involved in the development of China’s major blockchain project called the Blockchain Service Network (BSN) — has penned a new article devoted to various kinds of cryptocurrencies and their supposed Ponzi-like nature.

Published in the local newspaper The People’s Daily on Sunday, the piece refers to private cryptocurrencies as the “biggest Ponzi scheme in human history.”

The author mentioned the Terra network’s collapse, with the native token Terra (LUNA) — now known as Luna Classic (LUNC) — crashing 99% and the algorithmic TerraUSD Classic (USTC) stablecoin losing its 1:1 peg value to the United States dollar in May 2022. He also criticized the increasingly popular virtual currency concept known as X-to-earn, referring to move-to-earn or play-to-earn projects, calling the model a “phishing strategy.”

The BSN chair also mentioned some well-known criticism of Bitcoin (BTC) by Microsoft founder Bill Gates and legendary investor Warren Buffett.

He is not a fan of Bitcoin or any similar cryptocurrencies himself as well. “Currently, all unregulated cryptocurrencies including Bitcoin are Ponzi schemes based on my understanding, just different risk levels based on the market caps and number of users,” He said in a statement to Cointelegraph on Monday.

The BSN chair added that he had not had any cryptocurrency wallet or related assets ever: “I don’t touch them and won’t touch them in the future even if they become regulated because I don't consider that they have any value whatsoever.”

According to He, governments like El Salvador — which opted to adopt BTC as legal tender — “seriously need basic financing training.” “Otherwise, they put entire countries at risk unless their original intentions were to build state-owned crypto trading platforms and scam off on their citizens,” the exec told Cointelegraph.

While criticizing Bitcoin and many other crypto projects, He still believes that some part of the crypto market could be doing just fine if it’s properly regulated. Cash-backed stablecoins like Tether (USDT) and Circle’s USD Coin (USDC) should not be viewed as Ponzi-like schemes, the BSN chair said, stating:

“USDC or USDT are payment-related currencies, not speculative assets. Once they are fully regulated, they are fine.”

He previously talked in favor of stablecoins in 2020. The executive once planned to integrate stablecoin payments into BSN as of 2021. The plan was eventually scrapped due to China’s hostility to crypto.

The news comes amid the Chinese government capitalizing on the ongoing crypto market crash to justify its multiple bans on the industry. The latest coordinated ban was enacted in September 2021, with multiple Chinese authorities taking action to prohibit all kinds of crypto transactions in the country.

Despite all efforts, China continued to be a dominant Bitcoin mining supplier worldwide. According to data from the Cambridge Bitcoin Electricity Consumption Index, China was the second largest BTC mining hash rate producer after the United States as of January 2022.