Mar 01, 2023 04:15
China banning on Bitcoin had become a joke in the years preceding it actually happening, with the country repeatedly announcing that Bitcoin was banned, 6 times to be exact, and every time the percentage of Bitcoin's network located within China continued to increase.
However, last year, Chinese authorities began seizing expensive mining equipment from facilities still up and running, and the ban began to be taken seriously.
The process of shutting down hundreds of mining operations happened virtually overnight.
At the time of the ban, China was the top-ranked nation for Bitcoin mining...
Today, they're not even in the top 10.
China is currently just a blip on the radar, occasionally a Chinese IP address will be seen as some individual hobbyists, and a few remaining mining operations that say they simply pretended to shut down, relocated, and are now taking steps to hide their location.
Now, there are signs that China's leadership may view the ban on cryptocurrencies as too broad, with many leaders within China's tech industry believing that a crypto-free China would force the country to be a step behind the rest of the world.
"VR and the metaverse are largely considered the next big things to have a major impact on the industry - so, do people think they can hand over printed money in a digital world?" Says one of my sources, a lead developer for a Chinese software company that provides software related to the back-end management of both stock and crypto trading platforms. Speaking with the agreement that we wouldn't use his name, our (very encrypted) chat last night continued... "That's just the beginning, because everything you own in that world, your clothes, your house, your car. they're all going to be NFTs. I was worried China would be sitting it out, delusional, and waiting for the day people say they no longer have a need for decentralized cryptocurrencies thanks to China's digital yuen. The reality of it is, people are going to be buying crypto (NFTs) with other crypto."
The Signs...
The current crypto ban did not result in every crypto-related company in China being shut down. Some crypto-based companies were allowed to continue operating inside China if their user base was mostly international. If companies could remain profitable while still excluding Chinese citizens from their services, they were allowed to continue operating.
One such company is Conflux, which recently saw a huge influx of funds, resulting in gains of 143% in just one week and 800% over the last month.
Assets such as Filecoin, Neo, Vechain, Cocos-BCX, Polkadot, and EOS have registered price increases of between 10% and up to 40% in a matter of days.
Why this sudden positive price movement for anything crypto related out of China?
What began as a rumor has just became a very real possibility...It is now confirmed via the Hong Kong Securities and Futures Commission (SFC) - they're evaluating a
proposal that would legalize crypto trading in Hong Kong. While officially part of China, Hong Kong still has the ability to pass laws independent of the mainland.
The law would bring regulation of exchanges - and also legalize buying, selling and trading in the territory.
Currently, no western based investment firms (which are required to reveal their holdings) have announced large investments in Chinese based cryptocurrencies or their supporting companies.
As of now, our best guess that the investing is happening internally, specifically by wealthy investors who believe this is going to happen. While these trades may technically be breaking the rules today, they believe ownership of these assets will soon be given the green light anyway.
Keep in mind, anyone in China with millions to invest will also have close ties with the ruling party, so their investments could indicate they know much more than the general public. If that is the case here, it seems they've been told that this is going to happen.
Where things stand as of today...
The biggest surprise - we're hearing that Hong Kong leaders are NOT being met with disapproval from China's leadership in Beijing "there's nothing to indicate mainland officials don't want this to happen, and I believe we're well beyond the point where they would make their stance known" a source explained.
Beijing quietly allowing this to happen may be thanks to some of China's wealthiest business leaders, who have been complaining to officials about being restricted from a market with huge growth potential - saying they understand the risks, and take proper safeguards to prevent any catastrophic losses. They believe those who can afford to take risks should be guided by regulations that take this in to account.
It's unlikely the same leadership that banned crypto trading have completely reversed their views, but they may now be willing to allow it if the the requirements still discourage the average citizen Only allowing crypto trading via Hong Kong would be enough of a barrier to stop the 'average worker' from risking their funds in the market, as the expenses involved with taking trips to and from Hong Kong would be enough to make simply make it not worth doing.
A major impact to global crypto markets...
As one of the largest economies in the world, and its re-entry into the cryptocurrency market could have a ripple effect on the global market. This could lead to increased adoption of cryptocurrencies worldwide.
Also worth noting - China's ban has been an example to other counties that discourage investing or adoption of cryptocurrencies - Chinese investors re-joining the crypto market would mean no major superpower is enforcing a ban on cryptocurrencies.
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Author: Adam Lee
Asia News Desk / Breaking Crypto NewsSubscribe to GCP in a reader
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