In the past year, the cryptocurrency market has been hit hard by the Chinese government. The market was hit like a warrior, but the combo hit many cryptocurrency investors. Compared with the increase of a few thousandths in 2017, the market downturn in 2018 was overshadowed.
Since 2013, the Chinese government has taken measures to regulate cryptocurrencies, but no measures have been taken compared to 2017. (Check out this article to analyze in detail the official notice issued by the Chinese government)
2017 was a landmark year for the cryptocurrency market, and it has gained all the attention and growth. Extreme price fluctuations forced the central bank to take more extreme measures, including banning initial coin offerings (ICO) and suppressing domestic cryptocurrency exchanges. Soon after, Chinese mining factories were forced to close due to excessive electricity consumption. Many exchanges and factories have moved overseas to avoid regulations, but they are still available to Chinese investors. Nevertheless, they still failed to escape the claws of the Chinese dragon.
In a series of government-led efforts to monitor and prohibit cryptocurrency transactions among Chinese investors, China has expanded the scope of its “Eagle Eye” to monitor foreign cryptocurrency transactions. Companies and bank accounts suspected of conducting transactions and related activities with foreign cryptocurrency exchanges will be subject to measures ranging from restricting withdrawal limits to freezing accounts. There have even been rumors in the Chinese community that more extreme measures will be implemented on foreign platforms that allow transactions between Chinese investors.
“Regarding whether there will be further regulatory measures, we will have to wait for orders from higher authorities.” On February 28, an excerpt from an interview with the head of the Chinese Public Information Network Security Supervision Agency of the Ministry of Public Security
why why why! ?
Imagine your child invests his savings in digital products (cryptocurrency in this case), and he/she cannot verify its authenticity and value. When the crypto bubble bursts, he or she may be lucky and get rich, or lose all. Now to extend it to millions of Chinese citizens, we are talking about billions of yuan.
The market is full of scams and meaningless ICOs. (I’m sure you have heard that someone sent coins to a random address and promised to double their investment and ICO, but that doesn’t make sense at all). Many savvy investors are spending for money, rather than caring about the technology and innovation behind it. The value of many cryptocurrencies comes from market speculation. During the cryptocurrency boom in 2017, you can participate in any ICO with famous on-board advisors, promising teams, or decent hype and be sure to get at least 3 times the investment.
The lack of understanding of the company and the technology behind it, coupled with the proliferation of ICOs, is the source of the disaster. Members of the central bank report that nearly 90% of ICOs are fraudulent or involve illegal fundraising. In my opinion, the Chinese government wants to ensure that cryptocurrencies remain “controllable” and not too large to fail in the Chinese community. China is taking the right steps towards a safer and more regulated world of cryptocurrency, despite its aggressive and controversial nature. 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 very much because it makes no sense to do so. Currently, financial institutions are prohibited from holding any encrypted assets, and individuals are allowed but prohibited from conducting any form of transactions.
A state-run cryptocurrency exchange?
In the “two sessions” each year (it is named because the two main political parties-the National People’s Congress (NPC) and the National Committee of the Chinese People’s Political Consultative Conference (CPCC) have participated in the first week of March At the forum, leaders gathered to discuss the latest issues and make necessary legal amendments.
NPCC member Dang Wang got involved in the prospect of a state-owned digital asset trading platform and launched an education project on blockchain and cryptocurrency in China. However, the proposed platform will require an authenticated account to conduct transactions.
“With the establishment of relevant regulations and the cooperation between the People’s Bank of China (PBoC) and the China Securities Regulatory Commission (CSRC), a standardized and efficient cryptocurrency trading platform will become a company raising funds (through ICO and investors holding its digital Assets and realize capital appreciation”, excerpts of Wang Pengjie’s speeches at the two conferences.
Towards a blockchain country
Governments and central banks all over the world are struggling to cope with the increasing popularity of cryptocurrencies. But what is certain is that everyone embraces the blockchain.
Despite the cryptocurrency crackdown, blockchain has gained popularity and adoption at all levels. The Chinese government has been supporting the blockchain project and adopting the technology. In fact, the People’s Bank of China (PBoC) has been studying a digital currency and has conducted analog transactions with some commercial banks in the country. It is still uncertain whether digital currencies will be decentralized and provide cryptocurrency features such as anonymity and immutability. Given that anonymity is the last thing China wants in their country, it is not surprising if it is just a digital yuan. However, as a close substitute for the RMB, digital currency will be subject to existing monetary policies and laws.
Zhou Xiaochuan, Governor of the People’s Bank of China. Source: CNBC
“A lot of cryptocurrencies have experienced explosive growth, which may have a huge negative impact on consumers and retail investors. We don’t like (cryptocurrency) products taking advantage of huge speculative opportunities to give people the illusion of getting rich overnight “. On Friday, March 9, Zhou Xiaochuan was interviewed.
In a media appearance on Friday, March 9, Zhou Xiaochuan, governor of the People’s Bank of China, criticized cryptocurrency projects that use the prosperity of cryptocurrencies to make money and stimulate market speculation.He also pointed out that the development of digital currency is technically inevitable
At the regional level, many Chinese cities are promoting blockchain projects to promote their regional growth. Hangzhou, known for its Alibaba headquarters, said that blockchain technology will be one of the city’s top priorities in 2018. The local government of Chengdu has also been proposed to build an incubation center to promote the adoption of blockchain technology in China. City’s financial services.
Local conglomerates such as Tencent and Alibaba have also established partnerships with blockchain companies or initiated projects on their own. Blockchain companies such as VeChain have also established multiple partnerships with Chinese companies to improve the transparency of China’s supply chain.
All clues indicate that China is working hard to establish a blockchain nation. China has always been open to emerging technologies such as mobile payments and artificial intelligence. From now on, there is no doubt that China will become the first country to enable blockchain. Will we see the fall of the Chinese government and let its citizens trade again? The market may be mature and less volatile, but it will definitely not appear in 2018.