Chinese Tough Rules on Cryptocurrency are Meant to Help the Sector
China is supporting Crypto development
The Chinese financial technology researchers and entrepreneurs keep trying new things in digital currencies because the border-less digital currencies are not supported by any county’s monetary authority. The most recent development is a business man in Shanghai who created an open software system for building an exchange for crypto trades. The problem is that the Chinese government keeps on attacking any developments towards crypto success in the country. There was a recent raid this month were Shanghai police stopped an event convened by blockchain investors.
Expect these problems to go on because China is trying to protect its 12 trillion-dollar economy which was facing crypto threat last year. This does not mean that china is not interested in cryptocurrency. It is very interested on that it wants it to develop in a regulated and manageable manner.
According to Felix Yang, who is an analyst at Kapronasia in Shanghai:
“It’s evident that without the control of a government cryptocurrency could become an avenue for capital outflow, drug dealing among other illegal activities. The Chinese government is not against the development of cryptocurrency only that it wants it when it’s more manageable. “
China has been very hash with cryptocurrencies. Last year they banned ICOs as a fundraising tool as well as some types of exchanges in Cryptocurrency. In this year they axed peer-to-peer trading networks and then they later banned off show exchanges of digital currencies. The Chinese authorities have warned that tougher regulations are on the way.
The government is also very keen to stop the renewal of the mass capital outflows. This is derived by the fact that policy makers in China are worried that capital flight would devalue the Yuan currency which would lead to the undermining of the economic stability which mainly depends on a strong foreign exchange reserve. The authorities also believe that wide investment in cryptocurrency would pose a very great risk to Yuan.
The county may welcome cryptocurrency back
The positive thing is that the Chinese monetary authority intends to research on a way to develop cryptocurrency in China. In fact the authority has already termed cryptocurrency as priority in 2018 and it’s good to know that when china prioritizes on something they act. Their main focus is however likely to be in Blockchain which supports the digital currencies and more to that they may be keen to use cryptocurrency in their monetary policy.
The local governments in China have been coming up with Blockchain funds to fund startups in the country. A good example is the Xiong’An Global Blockchain Innovation Fund which is offering 1.6 billion dollars to Blockchain startups. More to that the Chinese Central bank has acknowledged the inevitability of Cryptocurrencies saying that they will eventually replace paper money.
According to a Taiwanese regulator Jason Hsu: “China will continue to be tough because they it to be in their own hands, they want to control it. They might be developing some chains in the country which will be run by the government.”