Over the past year, the cryptocurrency market has received a number of severe blows from the Chinese government. Market hits were perceived as a warrior, but the combinations showed their influence on many cryptocurrency investors. Poor market performance is down from a thousand percent gain in 2017.
Since 2013, the Chinese government has taken steps to regulate cryptocurrencies, but nothing has happened compared to what was introduced in 2017. (See this article for a detailed analysis of the official statement issued by the Chinese government)
2017 was a banner year for the cryptocurrency market with all the attention and growth it gained. Excessive price volatility has forced the central bank to take more drastic measures, including a ban on initial coin offerings (ICOs) and closures on domestic cryptocurrency exchanges. Mining factories in China were soon forced to shut down under the pretext of excessive electricity consumption. Many exchanges and factories moved abroad to avoid regulation, but remained accessible to Chinese investors. However, they still can’t escape the Chinese Dragon’s claws.
In a recent government-led effort to track and ban cryptocurrency trading among Chinese investors, China has expanded its “Eagle’s Eye” to monitor foreign cryptocurrency exchanges. Companies and bank accounts suspected of conducting operations and related activities with foreign crypto exchanges are subject to measures ranging from limiting withdrawal limits to freezing accounts. There are constant rumors among the Chinese public about more extreme measures to be applied on foreign platforms that allow Chinese investors to trade.
“As to whether there will be more regulatory action, we must wait for orders from higher authorities.” Excerpts from an interview with the group leader of the Public Information Network Security Supervision Agency under the Ministry of Public Security of China, February 28
WHY WHY WHY !?
Imagine that your child is investing their savings in a digital product (in this case cryptocurrency), there is no way to check its authenticity and value. You can be lucky and get rich, or you can lose it all when the crypto bubble bursts. Now convey this to millions of Chinese citizens, and we are talking about billions of Chinese Yuan.
The market is full of fraud and meaningless ICOs. (I’m sure you’ve heard the news that people are sending money to random addresses with promises of doubling their investments and meaningless ICOs). Many reluctant investors are in the money and pay less attention to the technology and innovation behind it. The value of many cryptocurrencies stems from market speculation. During a crypto-boom in 2017, join any ICO with either a well-known consultant, or a promising team, or a good reputation, and guarantee at least 3 times your investment.
The lack of understanding of the firm and the technology behind it is a recipe for disaster with the proliferation of ICOs. Members of the central bank say that almost 90% of ICOs commit fraud or illegal fundraising. I think the Chinese government wants to ensure that cryptocurrencies are ‘managed’ and not too big to fail within Chinese society. Although aggressive and controversial, China is moving towards a safer, more regulated cryptocurrency world. In fact, this may be the best move the country has taken in decades.
Will China issue an ultimatum and make cryptocurrency illegal? I doubt it, because it is pointless to do so. Currently, financial institutions are prohibited from owning any crypto assets, and individuals are allowed to engage in any form of trading.
State-run cryptocurrency exchange?
Both are attending the annual “Two Meetings” (named after the two major parties – the National People’s Congress (NPC) and the National Committee of the Chinese People’s Political Consultative Conference (CPPCC)) in the first week of March. Gather to discuss the latest issues and make the necessary legal changes.
NPCC member Wang Pengjie was interested in the prospects of a digital asset trading platform operated by the state, and also launched educational projects related to blockchain and cryptocurrency in China. However, an approved account is required to allow trading on the proposed platform.
“An effective cryptocurrency exchange platform with the establishment and regulation of regulations related to the People’s Bank of China (PBoC) and the China Securities Regulatory Commission (CSRC) to protect the digital assets of companies (ICOs) and investors to achieve capital valuation” Wang Pengjie in Two Sessions ‘s presentation.
The march towards the Blockchain Nation
Governments and central banks around the world have struggled to cope with the growing cryptocurrency; but one thing is for sure, they all embraced the blockchain.
Despite the cut in cryptocurrency, the blockchain is gaining popularity and appropriation at various levels. The Chinese government supports blockchain initiatives and adopts technology. In fact, the People’s Bank of China (PBoC) is working on digital currency and conducting fraudulent transactions with some commercial banks in the country. It has not yet been confirmed that digital currency will not be centralized and that cryptocurrency will offer anonymity and invariability. Given that anonymity is the last thing China wants in its own countries, it would not be surprising if it turns out to be a digital Chinese yuan. However, the digital currency, created as a close substitute for the Chinese yuan, will be subject to existing monetary policy and laws.
Zhou Xiaochuan, Governor of the People’s Bank of China. Source: CNBC
“Many cryptocurrencies have seen explosive growth that could have a significant negative impact on consumers and retail investors. We don’t like products (cryptocurrencies) that take advantage of a great opportunity for speculation that makes people dream of getting rich overnight,” Zhou Xiaochuan said in a report on Friday, March 9.
Zhou Xiaochuan, chairman of the People’s Bank of China, criticized the cryptocurrency projects used to make cash in the crypto-boom and increase market speculation during a media speech on Friday, March 9th. He also noted that the development of digital currency is ‘technologically inevitable’.
At the regional level, many Chinese cities are promoting blockchain initiatives to promote growth in their regions. Hangzhou, known as Alibaba’s headquarters, said blockchain technology will be one of the city’s top priorities in 2018. Local authorities in Chengdu have also been asked to set up an incubation center to encourage the adoption of blockchain technology. financial services of the city.
Local conglomerates such as Tencent and Alibaba have also partnered with blockchain firms or launched projects themselves. Blockchain companies, such as VeChain, have also established numerous partnerships with Chinese companies to improve the transparency of the supply chain in China.
All indications are that China is working towards a blockchain nation. China has always been open to emerging technologies such as mobile payment and artificial intelligence. After that, China will no doubt be the first country to support the blockchain. Will we allow the Chinese government to withdraw and allow its citizens to trade again? Probably when the market matures and becomes less volatile, but not in 2018.