Over the past year, the cryptocurrency market has been hit hard by 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 is offset by a one-thousand-percent star gain in 2017.
Since 2013, the Chinese government has taken steps to regulate cryptocurrency, but nothing compared to what was set in 2017. (See this article for a detailed review of the official notice issued by the Chinese government.)
2017 was a full year for the cryptocurrency market with all the attention and growth it has gained. Extreme price volatility has forced the Central Bank to take more extreme measures, including a ban on initial coin offerings (ICOs) and restrictions on domestic cryptocurrency exchanges. Soon after, they forced China’s mining factories to shut down, citing excessive electricity consumption. Many exchanges and factories have been relocated abroad to circumvent the regulations, but have been made available to Chinese investors. However, they have not yet escaped 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 currency 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 will allow trading between Chinese investors.
“We will have to wait for the orders of the higher authorities to find out if there will be more regulatory measures.” Excerpts from an interview with the head of the Chinese Public Information Network Security Agency team under the Ministry of Public Security on 28 February.
WHY WHY WHY !?
Imagine that your child is investing their savings in a digital product (in this case, a cryptocurrency) that has no way of verifying its authenticity and value. He could be lucky and get rich, or he could lose everything when the cryptographic bubble burst. 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 the promise of doubling their investments and meaningless ICOs). Many unknown investors are in exchange for money and would not mind the technology and innovation behind it. The value of many cryptocurrencies stems from market speculation. In the 2017 crypto boom, get involved 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 sure that the cryptocurrency is “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 doubt it is quite useless to do that. Currently, financial institutions are prohibited from holding any cryptocurrencies while authorized by individuals, but they are prohibited from engaging in any form of trading.
State cryptocurrency exchange?
The two main parties – the two main parties – the National People’s Congress (NPC) and the National Committee of the Chinese People’s Political Consultative Conference (NCC) have been nominated for their participation in the forum in the first week of March. 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. for content and capital appreciation “Excerpts from Wang Pengjie’s presentation in both sessions.
Blockchain March for a Nation
Governments and central banks around the world have struggled to cope with the growing popularity of cryptocurrencies; 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 yet to be confirmed what the anonymity and immutability of a digital currency that will be decentralized and offer cryptocurrency features. It wouldn’t be surprising if it was just a digital Chinese Yuan, 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 policy and laws in force.
Governor of the People’s Bank of China, Zhou Xiaochuan. Source: CNBC
“Many cryptocurrencies have seen explosive growth, which could have a huge negative impact on consumers and retail investors. We don’t like (cryptocurrencies) products that give people a huge opportunity for speculation that they are excited to enrich 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 the cryptocurrency boom that took advantage of the cryptocurrency boom to charge and feed market speculation. He also described the development of digital currency as “technologically unavoidable”.
At the regional level, many Chinese cities are pushing for 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 has also proposed building an incubation center to encourage 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 people trade again? Probably when the market is ripe and not so volatile but certainly not in 2018.