The crypto market has suffered many negative impacts when China has made tough decisions against crypto in recent years:
- 2013: China bans banks from crypto transactions
- 2017: China bans crypto initial coin offerings
- 2019: Attention turns to bitcoin mining
- 2020: Enforcement ramps up
- 2021: China bans crypto trading and mining[1]
Every time there is negative information from China, the crypto community often worries because bans can cause the crypto market to lose investors and abundant cash flow from China. However, the crypto market continues to grow and is not dependent on any country. Even when China banned Bitcoin mining, miners came to the United States and helped the United States become the leading country in mining power, accounting for 35.4% of the hash rate, nearly double the second place, Kazakhstan, with 18.1%
[2].
Besides, China's relationship with cryptocurrency is more nuanced than the simple "banned" label often applied by Western media. While authorities cracked down on several aspects, individual ownership and peer-to-peer trading remain largely untouched
[3].
There are many reasons for this problem, I think that by pushing crypto into the gray area, China might keep crypto at arm's length while exploring blockchain tech and central bank digital currencies e-CNY from 2019: 120 million wallets, 26 cities serving as test beds and 5.6 million merchants registered to use the currency national, total transactions had reached 950 million with a cumulative value of 1.8 trillion yuan (US$249.9 billion) by the end of June 2023
[4].
Recently, Hong Kong, which is considered a territory strongly influenced by China, has opened its doors to crypto
[5]. This may be an experiment with crypto that China wants to conduct before opening up and adopting crypto in the mainland.
I personally believe that China is wise enough to realize the potential of crypto for the development of the economy, at least regarding the lucrative crypto tax source for the national budget. They are just developing their own CBDC and conducting small-scale testing in Hong Kong before opening up to crypto throughout the territory. If this happens, a huge amount of capital from Chinese investors could flow into the crypto market and create strong growth. I hope that this comes in 2025 and we have an extremely strong bullrun and take BTC to $100K.
What do you think about how China manages crypto? Is this an effective approach? What could China be planning with crypto in the future?
[1]
China Crypto Bans: A Complete History[2]
60+ Bitcoin Mining and Energy Consumption Statistics For 2024 You Need to Know[3]
China Never Completely Banned Crypto[4]
What’s the state of China’s digital yuan in 2023?[5]
As the US cracks down on crypto, Hong Kong extends a warm welcome