Last year, the cryptocurrency market took heavy punches at the hands of the Chinese government. The market took success like a warrior, but the combinations have affected many crypto-currency investors. The poor performance of the 2018 market pales in comparison to the one thousand percent star earnings in 2017.
Since 2013, the Chinese government has taken steps to regulate cryptocurrency, but nothing compared to what was established in 2017. (See this article for a detailed analysis of the official note issued by the Chinese government)
2017 was a full year for the cryptocurrency market with all the attention and growth achieved. Extreme price volatility forced the Central Bank to take more extreme measures, including a ban on initial coin offerings (ICOs) and restrictions on domestic cryptocurrency exchanges. Shortly afterwards, Chinese mining factories were forced to close, citing excessive electricity consumption. Many exchanges and factories have been relocated abroad to avoid regulation, but they have been made available to Chinese investors. However, they have yet to escape the clutches of the Chinese Dragon.
In a recent government-led effort to control and ban cryptocurrency trading among Chinese investors, China has launched an “Eagle Eye” to control foreign cryptocurrency exchanges. Companies and bank accounts that are suspected of transacting with foreign cryptocurrencies and related activities receive measures ranging from limiting withdrawal limits to freezing accounts. There have also been constant rumors among the Chinese community about the extreme measures to be put in place on foreign platforms that allow trading among Chinese investors.
“To find out if 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 Agency under the Ministry of Public Security on 28 February.
WHY WHY WHY !?
Imagine that your child invests his savings in a digital product (in this case, cryptocurrency) that has no way to verify its authenticity and value. He could be lucky and get rich, or he could lose everything when the cryptographic bubble bursts. We are now scaling that to millions of Chinese citizens and millions of Chinese Yuan.
The market is full of scams and unnecessary ICOs. (I’m sure you’ve heard of people who send coins to random addresses, with a promise to double their investments, and ICOs that don’t make sense). Many unknown investors are in exchange for money and the technology and innovation behind it would not matter. The value of many cryptocurrencies comes from market speculation. In the crypto boom of 2017, take part in any ICO with a reputable advisor, a promising team or a decent hype and you are guaranteed at least 3X your investment.
The lack of understanding of the company and the technology behind it, along with the proliferation of ICOs, is a recipe for disaster. Members of the Central Bank have reported that almost 90% of ICOs are fraudulent or involve illegal fundraising. In my opinion, the Chinese government wants to make the cryptocurrency “controllable” and not too big to fail in the Chinese community. China is taking the right steps towards a more secure and regulated world of cryptocurrency, despite being aggressive and controversial. In fact, it may be the best move the country has made in decades.
Will China issue an ultimatum and make illegal cryptocurrency? I highly doubt that doing so is quite useless. Currently, financial institutions are prohibited from possessing any crypto assets while authorized by individuals, but they are prohibited from engaging in any form of trading.
State cryptocurrency exchange?
In the two annual sessions, the two main parties: the National People’s Congress (NPC) and the National Committee of the Chinese People’s Political Consultative Conference (CPCC) both participate in a forum held in the first week of March ‰‰, leaders. to do.
Wang Pengjie, a member of the NPCC, internalized the prospects of a state-owned digital asset trading platform, as well as launching blockchain and cryptocurrency education projects in China. However, the proposed platform would require an authenticated account to allow trading.
“By implementing related regulations and in collaboration with the People’s Bank of China (PBoC) and the China Securities Regulatory Commission (CSRC), a regulated and efficient cryptocurrency exchange platform would serve as a formal way for companies to raise funds (through ICOs) and investors their digital assets. to achieve content and capital appreciation ”Excerpts from Wang Pengjie’s presentation in Two Sessions.
Blockchain March for a Nation
Governments and central banks around the world have struggled to cope with the growing popularity of cryptocurrency; but one thing is for sure, everyone has accepted the blockchain.
Despite cryptocurrency repression, the blockchain is gaining popularity and adoption on several levels. The Chinese government is supporting blockchain initiatives and adopting technology. In fact, the People’s Bank of China (PBoC) has been working on a digital currency and has conducted simulated transactions with several commercial banks in the country. It is still unconfirmed such as anonymity and immutability that will decentralize digital currency and offer cryptocurrency features. It wouldn’t be surprising if China was just a digital Yuan, anonymity is the last thing China wants in its country. However, created as a close substitute for the Chinese Yuan, the digital currency will be subject to the monetary policies and laws in force.
Governor of the People’s Bank of China, Zhou Xiaochuan. Source: CNBC
“Many cryptocurrencies have experienced explosive growth, which can have a huge negative impact on consumers and retail investors. We don’t like products (cryptocurrencies) that take advantage of the tremendous opportunity for speculation that gives people the illusion of enrichment overnight.” Interview with Zhou Xiaochuan on Friday, March 9th.
On Friday, March 9, the governor of the People’s Bank of China, Zhou Xiaochuan, in a media appearance, criticized cryptocurrency projects that took advantage of the cryptocurrency boom to charge and feed 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. They have also proposed to the local government of Chengdu city to build an incubation center to promote the adoption 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 like VeChain have also secured multiple partnerships with Chinese companies to improve supply chain transparency in China.
All the clues show that China is working for a blockchain nation. China has always been open-minded to emerging technologies such as mobile payment and Artificial Intelligence. From now on, China will certainly be the first country to enable blockchain. Will we see the Chinese government back down and let the citizens trade again? Probably when the market is ripe and not so volatile but certainly not in 2018.