For many years, China was an extremely important member of the digital currency market, with over 90% of the global trading volume being conducted in the region. However, back in September, the Central Bank of China decided to crackdown on cryptocurrencies and hence ban Initial Coin Offerings (ICOs) and stopping exchanges from serving customers in China.
Following the crackdown, there have been many rumours that China was planning to resume trading, yet a recent statement from a deputy governor of the People’s Bank of China dismisses these rumours.
Speaking at a financial forum taking place in Shanghai, Pan Gongsheng stated that the Beijing Government alongside the PBoC were right to make this decision. According to Pan, ‘If we had not shut down bitcoin exchanges and cracked down on ICOs several months ago, if China still accounted for more than 80% of the world’s bitcoin trading and ICO fundraising, everyone, what would happen today? It is scary to think about this.’
Apart from this aspect, the central bank governor also made a few statements saying that bitcoin may very-well be a bubble, similar to the housing bubble, tulip bubble of the 1600s, or dotcom bubble of 2000. According to him, bitcoin and other digital currencies will likely die out following a heist that would mean hacking into blockchain technology, or following a worldwide crackdown on cryptocurrencies. The first scenario is quite unlikely, given the fact that a hack of this magnitude would require the infection of tens of thousands of node-computers, and mining servers. No change on the network can be made without general consensus of at least 50%.
In the past, outlets have reported that China’s crackdown on cryptocurrencies was most likely due to the fact that investors were putting their money into these assets, hence capital was flowing out of China’s economy. However, when ICOs were banned, the PBoC mentioned that ICO funding had disrupted the economy alongside financial order.
Following the decision to ban ICOs and prevent digital currency exchanges from serving Chinese customers, many companies moved overseas, to countries with more permissive regulation. Now, China no longer accounts for a significant portion of worldwide trading activities.
Based on everything that has been outlined so far, what are your thoughts on China’s current opinion on cryptocurrencies? We’re excited to find out whether the country is considering the adoption of blockchain technology in the future, given its high potential and increasing worldwide interest.