Over the past year, the cryptocurrency market has received several severe blows from the Chinese government. The market took success as a warrior, but the combinations have had an impact on many cryptocurrency investors. Poor market performance in 2018 weakens compared to the one thousandth percentile gains in 2017.
Since 2013, the Chinese government has taken steps to regulate cryptocurrency, but nothing compared to what came into force in 2017. (See this article for a detailed analysis of the official note issued by the Chinese government)
2017 was a year for the cryptocurrency market with all the attention and growth achieved. Extreme price volatility forced the central bank to take extreme measures, including a ban on initial currency offerings (ICOs) and restrictions on domestic cryptocurrency exchanges. Soon after, Chinese mining factories had to close, citing excessive electricity consumption. Many exchanges and factories have been relocated abroad to avoid regulations, but they have been made available to Chinese investors. However, they have yet to escape the clutches of the Chinese Dragon.
In recent series of government-led efforts to control and ban cryptocurrency trading among Chinese investors, China has extended its “Eagle’s Eye” to control foreign cryptocurrency exchanges. Companies and bank accounts that are suspected of having transacted with foreign cryptocurrencies and related activities are taking steps from limiting withdrawal limits to freezing accounts. There have also been constant rumors among the Chinese community about the most extreme measures to be implemented on foreign platforms that allow trading between Chinese investors.
“Whether or not there will be more regulatory measures, we will have to wait for orders from higher authorities.” Excerpts from an interview with the head of the team of the Chinese Public Information Network Security Surveillance Agency under the Ministry of Public Security.
WHY WHY WHY !?
Imagine that your child has no way to verify its authenticity and value by investing their savings in a digital product (in this case, cryptocurrency). He can be lucky and he can be rich, or he can lose everything when the crypto bubble bursts. We are now scaling millions of Chinese citizens and billions of Chinese yuan.
The market is full of scams and nonsensical ICOs. (I’m sure you’ve heard the news of those who send coins to random addresses, with the promise of doubling their investments and ICOs that don’t make sense). There are a lot of unsecured investors in exchange for money and they would care less about technology and innovation. The value of many cryptocurrencies is derived from market speculation. During the 2017 crypto boom, participate in any ICO, with a reputable advisor, a promising team, or with decent publicity, and you are guaranteed at least 3 times your investment.
Not understanding the company and the technology behind it, along with the proliferation of ICOs, is a recipe for disaster. Members of the Central Bank reported that almost 90% of ICOs are fraudulent or involve illegal fundraising. In my opinion, the Chinese government wants to make sure that cryptocurrency remains “controllable” and that it is not too big to fail within the Chinese community. China is taking the right steps to make cryptocurrency more secure and regulated, albeit aggressive and controversial. In fact, it may be the best move the country has made in decades.
Will China issue an ultimatum and make cryptocurrency illegal? I highly doubt it, as it is quite useless to do so. Currently, financial institutions are prohibited from holding any cryptographic assets, but all types of trading are prohibited.
State cryptocurrency exchanges?
The annual “Two Sessions” (because two important parties are nominated – the National People’s Congress (NPC) and the National Committee of the People’s Political Advisory Conference (CPCC)) participate in the forum in the first week of March. leaders meet to discuss final issues and make necessary legal changes.
Wang Pengjie, a member of the NPCC, delved into the possibilities of a platform for marketing digital assets in the state, as well as starting educational projects on blockchain and cryptocurrency in China. However, the proposed platform would require an authenticated account to allow trading.
“When related regulations are established and in collaboration with the People’s Bank of China (PBoC) and the Securities Regulatory Commission (CSRC), a cryptocurrency exchange platform would be a regulated and effective platform for raising funds (via ICOs) and investors save their digital assets and capital. to gain appreciation ”Wang Pengjie part of the presentation in Two Sessions.
A march towards a national blockchain
Governments and central banks around the world have achieved a growing popularity of cryptocurrencies; but one thing is for sure, everyone has taken the blockchain.
Despite the repression of cryptocurrency, blockchain is gaining popularity and adoption at various levels. The Chinese government has been supporting blockchain initiatives and embracing technology. In fact, the People’s Bank of China (PBoC) has been working on a digital currency and making fake transactions with some of the country’s commercial banks. It is still unconfirmed the anonymity and immutability of the digital currency that will be decentralized and offer the characteristics of a cryptocurrency. It wouldn’t be surprising if China’s digital yuan is just that, anonymity is the last thing China wants in its country. However, created as a close substitute for the Chinese Yuan, digital currency will be subject to the monetary policies and laws in force.
Zhou Xiaochuan, governor of the People’s Bank of China. Source: CNBC
“Many cryptocurrencies have seen explosive growth, which could have a negative impact on consumers and retail investors. We don’t like (cryptocurrencies) products that take advantage of the tremendous opportunity for speculation that gives people the illusion of getting rich overnight,” Zhou Xiaochuan said in an interview on Friday, March 9.
On Friday, March 9, in a speech by the governor of the People’s Bank of China, Zhou Xiaochuan criticized cryptocurrency projects for making money in the crypto boom and fueling market speculation. He also noted that the development of digital currency is “technologically unavoidable”
At the regional level, many Chinese cities are pushing blockchain initiatives to boost growth in their region. Hangzhou, known for being the headquarters of Alibaba, has stated that blockchain technology is one of the city’s top priorities in 2018. The local government of Chengdu city has been proposed to build an incubation center to promote the use of blockchain technology. city financial services.
Local conglomerates Tencent and Alibaba have also partnered with blockchain companies or started projects on their own. Blockchain companies, such as VeChain, have secured multiple partnerships with Chinese companies to improve supply chain transparency in China.
All clues indicate that China is working for a blockchain nation. China has always been open-minded in the face of new technologies like mobile payment and Artificial Intelligence. From now on, China will certainly be the first country to enable blockchain. Will we see the Chinese government step back and allow citizens to trade again? Probably when the market is ripe and not so volatile, but definitely not in 2018.