The Current State of Digital Currencies in China

By Daniel Zo Bitcoin, China

The People’s Bank of China, also known as PBOC, has been in the media’s attention during the last month, as it is currently deliberating the faith of digital currency and digital currency exchanges operating in the Asian country.

A recent digest from the PBOC related on the current Yuan rates, market sentiment, a couple of new developments in the country’s exchange policies, but also changes in the financial market regulations, and Chinese economic data.

Digital currencies are also mentioned, and in this case, it has been stated that bitcoin exchanges are unlikely to become official exchanges in China in the near future. Not only this, as the Chairman of the Bank’s Operation Office, Zhou Xuedong mentioned that a couple of price bubbles were noticed on bitcoin, and that China is in desperate needed of a proper legislative framework concerning Bitcoin trading. Because of this, the regulator will likely introduce a couple of other measures in order to help strengthen the oversight that the PBOC plays above Bitcoin exchanges and platforms operating in China.

China Bitcoin

Information was also mentioned about another project, which states that regardless of the fact that exchanges will not be considered as officials, bitcoin platforms will be required to receive an approval from the securities regulator, but also the State Council in some cases. Luckily, this will not happen yet, as Zhou mentioned.

It is also likely that inspections will be carried out in the future as well, upon some of the country’s biggest exchanges, therefore affecting the trading power of China yet again. It is worth pointing out that before the first inspections were launched, the trading volume of the three main Chinese bitcoin exchanges took about 98% of the world’s entire trading volume, which is absolutely huge. However, the volume plunged, and remained subdued when compared to its earlier highs in value. In fact, the Chinese share in bitcoin trading by volume dropped to a massive 19%, as bitcoin exchanges were forced to suspend withdrawals until further security features were put into place, as demanded by the regulators.

As spending has become one of the major drivers of the Chinese economy, the government tried to limit spending Yuan on foreign currency, thus reducing the outflow of capital from the country. To avoid being affected by the implementation of such measures, many Chinese investors decided to redirect their funds towards bitcoin-based investments, while the Yuan was freefalling in value. This has led to a higher interest in bitcoin from the Chinese government.

Based on everything that has been outlined so far, what is your personal opinion on the future of digital currencies in China? Let us know your thoughts in the comment section below.