Chinese President Xi Jinping spoke in favor of blockchains in October 2019. In November, the government reinforced regulatory pressure on Bitcoin and other cryptocurrencies.
When President Xi Jinping expressed the need for China to become a leader in the development of blockchains, the cryptocurrency ecosystem exploded. “China is on the side of Bitcoin and cryptocurrencies,” was one of the positions on the Chinese president’s words.
However, the statements of the Chinese president do not change his government’s position on cryptocurrencies. The restrictions on Bitcoin trading have been reinforced, even shortly after the president publicly stated that they need to lead the blockchains ecosystem.
It can be seen that the People’s Bank of China (PBOC) intends to strengthen regulation and control, through which it seeks to reduce cryptocurrency trading. Besides, the central bank declared that the issuance, financing, and trading of virtual currencies involve multiple risks.
Blockchain, Not Bitcoin
A series of meetings with Bitcoin exchange houses held in China in 2017 did not give rise to agreements but the suspension of exchange services with Bitcoin, inspections against exchange houses and even a fixed rate for such platforms.
Similarly, in early 2019, the Cyberspace Administration of China (CAC) approved the Regulations on the Management of Blockchain Information Services, under which companies that offer services with blockchains are required to censor content and record the identity of each user, thus allowing the government to access that information.
Beyond the attempts against Bitcoin, the country has even recognized it as a virtual property with value on more than one occasion, through courts in different regions. Chinese cryptocurrency analyst Dovey Wan considers that this gives legality to the cryptocurrency and other personalities of the field believe that the government has been softening its position.
After many obstacles and inspections, among other negative factors, China relaxed its position on companies in the blockchain sector. In a first wave, about 200 of these companies passed the regulatory filter, preceding the pro-blockchains position shown by Xi Jinping.
Their Own Cryptocurrency
It is a fact that the Chinese government has a clear position on this issue. It wants the development of blockchains in the country to grow. At the same time, it intends to launch its cryptocurrency as a digital alternative to the yuan.
By March 2018, there was no hurry about developing the cryptocurrency, but now the plans have a set time, according to the director of the PBOC. After a time when it seemed as though the Chinese cryptocurrency would not be issued, the Facebook cryptocurrency Libra was announced, worrying the authorities and leading them to retake their digital yuan initiative.
According to Wang Xin, research director at the PBOC, their main concern was the possibility that Libra would threaten Chinese stability and sovereignty, especially if citizens adopted it massively for cross-border payments. After those movements, rumors have not stopped, but the development of the Chinese cryptocurrency is being conducted with great suspicion.
This is how China wants blockchain and, therefore it cannot be expected to resemble Bitcoin. The intention behind the plans of the Chinese government seems to respond to a need to defend against decentralized cryptocurrencies and strengthen its governing capacity.
By Alexander Salazar