Is China Still Against Cryptocurrencies?

  • November 25, 2019

China is a global leader on several issues, and the cryptocurrencies issue is one that has seen the republic become quite vocal. Many superpowers, the USA included, have expressed their concerns over the new technology. China, however, has been quite vocal to the point of banning cryptocurrencies in the country, which led to the collapse of the major crypto markets in China. 

A few weeks ago, reports emerged that Xi Jinping, China’s President, was finally on the cryptocurrency wave. According to the claims, the president acknowledged the importance of Blockchains and cryptocurrencies and said that China would follow suit in adopting the technological changes. 

However, a few weeks later, Xi claimed that the reports were false and maintained that he is not a fan of cryptocurrencies. So, what is China’s stand on cryptocurrencies? Are they in or out?  

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Jinping’s Announcement Skyrocketed BTC Prices

On 24th October, Xi Jinping gave a speech on the importance of Blockchain technology. He delivered this speech during a meeting of the senior members of the Communist Party of China Central Committee, which he chairs. 

Xi said that the technology is particularly impactful, as it can be integrated into various industries such as healthcare, education, finance, and public services. He also mentioned that several governments were putting the technology to the test with several projects and that China would not be left behind.

Following Jinping’s speech, Bitcoin’s price shot up by around 42% in just a few hours. Xi became a darling in the crypto world, and many interpreted this as China’s long-awaited acceptance of digital currencies.

However, amidst all the speculations, President Xi Jinping reaffirmed that China was against cryptocurrencies and brushed them off as illegal Ponzi schemes.

China is Set to Launch its Digital Currency

During the speech, Jinping mentioned that Blockchain technology is at China’s heart. The country plans to use the technology to ‘increase China’s influence and rule-making power in the global arena.’ This, coupled with the president’s remarks, indicate that China is warming up to digital currencies, but only their own and not foreign ones. 

Xi Jinping took to China Central Television to set the record straight on the matter. Also, the central bank advised local government agencies to stop collaborating with cryptocurrency partners. 

China’s digital currency will be different in several ways. For one, it will not be completely decentralized, given that the People’s Bank of China (PBOC) will be issuing the currency. The nation is also looking to use it to replace all the existing money supply. 

According to Mu Changchun, head of PBOC’s digital currency research institute, the technology is ready even though the central bank is still testing prototypes. It is expected that China will launch the currency sometime next year.

Final Word

China plans to use Blockchain technology without incorporating foreign cryptocurrencies. According to some reports, Facebook’s announcement of Libra propelled the country to double its efforts to launch a digital currency. Libra posed a threat to China’s financial sovereignty.

The long-term plan is to, however, expand the yuan’s global acceptance. A digital currency from the second-largest economy in the world could quickly challenge the dollar’s position in the global financial market.

 

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