Members of the digital currency community are well-aware of the Chinese influence on Bitcoin and other altcoins, and this is quite understandable, considering the fact that a large percentage of all trading is being carried out in the Asian country.
During the last couple of months, Bitcoin has seen a massive growth in value, rising from around $600, up to $1,180, thus reaching its record-high in a total of 3 years. Economic analysts believe that the rise in value is mostly due to the strict capital controls in China, which have encouraged investors to see bitcoin as a way of getting past the controls, for further investing into ‘foreign’ capital. This has drawn quite a lot of attention to the digital currency in the eyes of regulators, which is why it is now believed that China will soon implement regulation, meant to limit, or better control the use of digital currencies in the country.
According to recent reports, it seems like there’ve been several meetings between representatives coming from the People’s Bank of China, and the heads of few major bitcoin exchanges operating in the region. The Bank representatives did state that exchanges should keep a close eye on capital outflows from the country, and that there is an actual need of regulation, to make sure that things don’t spiral out of control. It has also been outlined that bitcoin is not a currency, therefore it should not be traded as such, thus implying that circulation should be limited and that regulation should indeed be adopted.
While the Government’s position on the digital currency is somewhat understandable, it is important to be aware of the fact that Bitcoin is not the catalyst of China’s economic problems, but rather its over-heated economy, according to some analysts. Therefore, instead of focusing on trying to limit capital outflow from the country, the Chinese Government alongside with its Head Bank should look for ways to encourage more investors, and increase production in certain niches. This will likely encourage the Yuan to step back in game, thus limiting the damages caused by its biggest decrease in value in over two decades.
As China is home to over two thirds of all bitcoin mining power, and that a high percentage of all trades during the last half of year were conducted by using the Yuan, it is safe to say that a potential regulation in the country will likely lead to a decrease in value for the digital currency, but also a loss in terms of popularity. At this moment in time, it is not viable for bitcoin and other altcoins to survive without the processing power coming from China, thus making it an essential player in the digital currency environment.
Based on everything that has been outlined so far, what do you think about the potential bitcoin regulation that could be implemented in China? Let us know your thoughts in the comment section below.