The legal status of cryptocurrencies in China is a controversial topic. Yet, the Asian country is one of the most developed nations in the field of blockchain.
This might change after a major Chinese state-run media went against all the opinions of the government by publishing a financial study that highlights the potential of alternative assets such as bitcoin.
China’s Ban May Be FUD
As previously discussed on BTCManager, China’s National Development and Reform Commission (NDRC) published a 130-page report which stated that Bitcoin mining should be eliminated from the country.
In March 2019, the Beijing Internet Finance Industry Association published a notice stating that promoting ICOs, STOs, IEOs, or issuing digital currencies (stable or not) on social media is forbidden. The announcement also warned that groups involved in such activities would be severely punished by eviction, closure of their website and mobile app, and revocation of owner’s business licenses.
In 2018 the China Insurance Regulatory Commission (CIRC), the Ministry of Public Security (MPS), the Central Network Information Office (CNNIC), and the People’s Bank of China issued the “Risk Tips on Preventing Illegal Fund Raising in the Name of Virtual Currency” and “Blockchain.”
The Cyberspace Administration of China (CAC) later approved a policy that requires blockchain-based services to censor content and allow the country’s law enforcement to access its data and the identity of users.
A Possible Change of Heart
The situation may change after the Xinhua News Agency, a major Chinese state-run media, labeled bitcoin a safe-haven asset. The company, fully controlled by the government, has published a financial study to analyze the recent price increase.
The report begins by describing the risks associated with the world of cryptocurrencies, specifying that it would still take time for this market to gain investor confidence. However, global macroeconomic tensions, such as the trade war between China and America, highlight some of the reasons for attracting investors’ attention.
Noteworthy is the increase in volumes of traditional financial products linked to BTC such as the Chicago Mercantile Exchange (CME) futures, which allowed institutional clients to take advantage of this price increase.
The risks advertised in the report mainly concern volatility, hacking, fraud, and inadequate regulation. On this last point, the report cited the Governor of the Bank of England, Mark Carney, and of the President of the Federal Reserve, Jerome Powell, both of which declared to be open to cryptocurrencies as long as they meet the highest standards of regulation.
The report concludes with the opinion of Michael Graham, an analyst at Jiatong Investment Co., who stated in an interview with U.S. media that Bitcoin is likely to be widely used in the future, but it is still a growing “basic experiment.”
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