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Readying for a Cryptocurrency World: Tiongkok Edition

Over the past year, the cryptocurrency market procured a compilation of heavy blows from the Chinese government. The market procured the hits such as a warrior, but the combos have taken the cost of its in many cryptocurrency investors. The marketplace lackluster performance in 2018 pales in comparison to its great thousand percent gains in 2017.

What has occurred?

Since 2013, the Chinese government have taken actions to regulate cryptocurrency, but nothing at all than what was enforced in 2017. (Check out this article for a comprehensive assessment of the official notice released by the Chinese government)


2017 was a banner year for the cryptocurrency industry with all of the attention and growth it’s attained. The extreme price volatility thrust the Central bank to adopt more extreme measures, like the ban of initial coin offerings (Clampdowns and icos) on household cryptocurrency exchanges. Soon after, mining industrial facilities in China ended up being forced to shut down, citing excessive electrical energy consumption. Many exchanges and industrial facilities have transferred overseas to avoid regulations but remained handy for Chinese investors. However, they nonetheless are not able to escape the claws of the Chinese Dragon.

In the most up series of government led initiatives to watch as well as ban cryptocurrency trading among Chinese investors, China extended its “Eagle Eye” to monitor foreign cryptocurrency exchanges. Companies and bank accounts suspected of carrying out transactions with foreign crypto-exchanges and related activities are put through measures from restricting withdrawal boundaries to freezing of users. There have actually been ongoing rumors of all the Chinese group of further extreme measures to be enforced on international platforms which allow trading among Chinese investors.

“As for whether there’ll be further regulatory steps, we will have to wait for orders from the higher authorities.” Excerpts from an interview with team leader of the China’s Public Information Network Security Supervision agency under the Ministry of Public Security, 28th February

WHY WHY WHY!?

Imagine your kid committing his or the savings of her to purchase a digital product (in this particular situation, cryptocurrency) which he or perhaps she has no way of verifying its value and authenticity. He or perhaps she could get lucky and hit it rich, or lose everything when the crypto-bubble burst. Now scale that to an incredible number of Chinese people and we are talking about billions of Chinese Yuan.

The market is full of scams and useless ICOs. (I am certain you have heard news of folks sending coins to arbitrary addresses with the promise of doubling their investments as well as ICOs that just don’t make sense). Lots of unsavvy investors are in it for the funds and would care less about the technology and innovation behind it. The importance of many cryptocurrencies is produced from industry speculation. During the crypto boom in 2017, participate in any ICO with sometimes a well known advisor onboard, a promising staff members or perhaps a decent hype and you are sure at least 3X your investments.

A lack of knowledge of the technology as well as the tight behind it, put together with the proliferation of ICOs, is a strategy for disaster. Users of the Central bank reports that about 90 % of the ICOs are fraudulent or possibly calls for illegal fundraising. In my opinion, the Chinese government wants to make certain that cryptocurrency remains’ controllable’ and not too serious to fail within the Chinese society. China is taking the appropriate steps towards a safer, far more regulated cryptocurrency world, albeit aggressive and controversial. In reality, it may be perfect move the nation has had in decades.

Will China issue an ultimatum & generate cryptocurrency illegal? I highly doubt so since it’s so senseless to do so. Now, financial institutions are blacklisted from carrying any crypto assets while people are allowed to but are barred from carrying out any varieties of trading.

A State-run Cryptocurrency Exchange?

At the annual “Two Sessions” (Named because 2 major parties- National People’s Congress (NPC) along with the National Committee of the Chinese People’s Political Consultative Conference (CPCC) both participate in the forum)held on the first week of March, managers congregate to discuss about the most recent problems and make all the important law amendments.

Wang Pengjie, a new member of the NPCC dabbled into the potential customers of a state-run digital asset trading platform as well as initiate educational projects on blockchain as well as cryptocurrency in China. But, the suggested wedge would call for a authenticated account to allow trading.

“With the establishment of the co operation and related polices of the People’s Bank of China (PBoC) and also China Securities Regulatory Commission(CSRC), a regulated and efficient cryptocurrency exchange platform would perform as the proper way for companies to raise funds (through ICOs) as well as investors to keep their digital assets in addition to achieve capital appreciation” Excerpts of Wang Pengjie demonstration at the Two Sessions.

The March towards a Blockchain Nation

Central banks and governments worldwide have struggled to grapple with the increasing interest in cryptocurrencies; though one thing is certain, all have followed blockchain.

Regardless of the cryptocurrency crackdown, blockchain is actually gaining adoption and popularity in different amounts. The Chinese government have been supporting blockchain initiatives and adopting the technology. In fact, the People’s Bank of China (PBoC) have been working over a digital currency and have conducted mock transactions with some of the country’s commercial banks. It’s nevertheless unconfirmed if the electronic currency will be decentralized and offer features of cryptocurrency as anonymity and immutability. It would not come as a surprise if it turns out to be simply a digital Chinese Yuan given that anonymity will be the last thing which often China wants in the country of theirs. Nonetheless, invented as a close replacement of the Chinese Yuan, the electronic currency will likely be put through existing monetary policies and laws.

People’s Bank of China Governor, Zhou Xiaochuan. Source: CNBC

“Lots of cryptocurrencies have seen explosive growth which can bring significant negative impact on customers and retail investors. We don’t love (cryptocurrency) products which make use of the substantial chance for speculation which gives people the impression of getting abundant overnight” Excerpts from Zhou Xiaochuan employment interview on Friday, 9th March.

On a media look on Friday, 9th March, Governor of Individuals Bank of China, Zhou Xiaochuan criticized cryptocurrency projects that leveraged on the crypto-boom to money in and fuel industry speculation. He also noted that development of the digital currency is’ technologically inevitable’

On a regional fitness level, many Chinese cities have drive blockchain initiatives to promote growth in the region of theirs. Hangzhou, renown for turning out to be the headquarters of Alibaba, have stated blockchain technology to be one of the city’s top goals in 2018. Crypto signals in Chengdu city are also proposed the building of an incubation facility to cultivate the adoption of blockchain engineering within the city’s financial services.

Local conglomerates such Alibaba and Tencent in addition have produced partnership with blockchain firms or set up tasks alone. Blockchain firms like VeChain in addition have secured multiple partnerships with Chinese firms to improve supply chain transparency in China.

All clues point to the point that China is working towards a blockchain country. China has always had a wide open mentality to emergent technologies such as Artificial Intelligence as well as mobile payment. Henceforth, it’s without a doubt that China will be the very first blockchain enabled country. Will we see the Chinese government backing down and allow its citizens swap again? Almost certainly, when the market has matured and is much less volatile but not really in 2018.

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