China has been a very interesting actor for me in the crypto space. Anytime there’s a major shift in the price level of crypto markets — and especially if that shift is in an unmistakably downward direction — it’s hard to find a good explanation of it without involving some element of shifting Chinese policy. The most recent downturn in Bitcoin and the crypto markets at large has been partly attributed to the Chinese as they once again discuss the idea of banning any type of centralized crypto trading environment throughout the mainland. This isn’t the first time this idea has been proposed, and it certainly won’t be its last resurgence despite limited manifestations of actual legislation.
And yet, Xi Jinping and the rest of the Communist Party must surely recognize the huge economic growth potential that blockchain technology can bring to Chinese society, especially as they begin to take their environmental issues more seriously and seek to diversify the economy towards more high-tech and skills based output.
Of course, this questions of economic liberalization for the sake of growth has always been a fine balancing act for the communist regime in China. Blockchain further exaggerates the issue, being a technology designed to bring about a popular, decentralized “revolution” — which is exactly what the Chinese are most concerned about in the first place. It’s no surprise that President Xi is proceeding as cautiously as he can with blockchain tech without downright outlawing it, which would likely not be very effective in and of itself.
The China Banking Regulatory Commission (CBRC) has recently come out with something to say on the matter, urging the Communist Party to consider adopting blockchain technology as a foundation of future development in the country’s credit market. To substantiate their argument, they cite the advantages blockchain presents in data sharing, digital security, and ease of use over the current centralized trading system.
Thus, the struggle continues. Like the apple in the Garden of Eve, the promise of development and technological progress is so enticing for the Chinese, but they know they shouldn’t touch else put their centralized system of government at risk.
Will they bite?