China has had a reputation of being the first state in the world to institute a blanket ban on all things cryptocurrency. Last year during September, it went ahead to ban all ICO activities in the country and has continued to remain vocal on its stance since then. In that same month, the Chinese government ordered all local exchanges to shut down their operations in the state which led to the shut-down of major Chinese exchanges such as Binance and OKEx. Recently, the government stepped up its anti-crypto measures by initiating a new ban that prohibits commercial venues from hosting digital currency-related events.

Furthermore, Chinese tech giants such as WeChat, Tencent, Baidu, and AliPay are following the same agenda and are actively banning and shutting down accounts engaging in crypto and blockchain activities. All these anti-crypto campaign activities over the past 12 months have led to the closure of about 85 ICOs, 90 local crypto exchanges, and about 100 international exchanges that once served the China market. Previously, the Chinese Yuan used to make up about 90% of the entire global cryptocurrency transactions. However, this percentage has been dramatically reduced to about 1%, an adjustment mainly attributed to the country’s negative stance towards cryptocurrencies.

China’s Blockchain and Cryptocurrency History

China’s association with digital currencies such as Bitcoin has been extremely stormy ever since the beginning. As soon as the adoption of Bitcoin started becoming mainstream, the Chinese government severely clamped down on Bitcoin and all other Bitcoin-related activities. Initially, it began with a ban on all ICO activities in the country on September 4th, 2017. The country’s Central Bank regarded all ICOs as illegal and requested that all fundraising activities be shut down immediately. Soon after, on the 15th of September 2017, Chinese regulators demanded that all cryptocurrency exchanges shut down operations in the country by September 30th.

While these acts shook the entire Chinese digital currency economy, they were not enough to shut down the industry entirely. Traders were still finding ways to circumvent the bans and would rally to their favorite exchanges to trade. Eventually, the authorities found a way around this through the enactment of a firewall on the 5th of February this year. This firewall blocked crypto-exchanges from operating or being used in the country, thereby all-together banning cryptocurrency trading and access to crypto-assets, at least without the use of a VPN. Later on, in August of this year, the government issued a ban that prevented hotels, office buildings, and shopping areas from hosting or promoting cryptocurrency events.

China’s Seemingly Positive Attitude Towards Blockchain

The country’s initial overall harsh and hostile attitude towards cryptocurrencies painted a picture of a state that was utterly withdrawn from anything to do with Bitcoin or blockchain. However, this year, President Xi Jinping referred to blockchain as a breakthrough technology, a statement that perhaps reflected the country’s change in attitude towards blockchain. Furthermore, the Communist Party, in August of this year, published a book whose title reads as “Blockchain – a Reader for Cadre Leaders” alongside rumors of the development of a national digital currency. All this has led to some confusion as to what China’s position towards the entire crypto landscape is.

China’s Pro-Blockchain Moves a Ploy?

The Chinese government is well-known for its efforts to try and control seemingly uncontrollable things. It seemingly focuses on domestic stability and economic growth with a monetary policy playing a vital role in its economic strategy. It is also known for controlling people’s access to commonly available information. Therefore, Chinese authorities are not ready to let digital currencies or any other kind of technology threaten their power and legitimacy to rule. They fear that if any digital asset such as Bitcoin were to acquire widespread acceptance, it would limit their ability to steer the country as they see fit. Furthermore, the government is famous for using breakthrough technology for its benefit.

For instance, large tech giants in the country such as Alibaba and Tencent only exist in their current state due to the amount of protection provided by the Chinese government. Intense regulatory measures outright delayed or prevented foreign companies like Facebook from accessing the Chinese market. Moreover, such type of companies are primarily collaborative with the government when it comes to banning speech and any content contrary to domestic “stability” (aka, anything that disagrees with the party line). In fact, China’s social credit system will punish anyone who’s found to be socially unsavory, according to the communist government’s likes and dislikes – which could potentially be for things like peacefully speaking out against the government, or for things like “illegally” spreading religion. China’s seemingly positive attitude towards blockchain technology, therefore, may double down to it taking the same approach towards any new technology – control.

That’s the reason why China prefers to have blockchain technology without digital currencies. The Chinese government seemingly wants to leverage the technology to ensure the trustworthiness of public and administrative data. However, it does not want anyone to have the capability to use any cryptocurrency, for one reason or another. It’s precisely for this reason that it hopes to introduce its national digital currency. However, the chances are that it’s going to be a controlled and centralized cryptocurrency subject to the same monetary policies, restrictions, interest rates, limits, and regulations as conventional currency, just in a more controlled digital format, which might host at least some benefits for its citizens.

China’s Citizen Control           

As mentioned above, the government of China intends to introduce a national ranking system (which is already underway) whereby the behavior of its population can be monitored, and citizens can be ranked based on their social credit. Through the social credit system, people’s behavior is tracked, given a score, and depending on the score, rewards or punishments can be rolled out. The social credit adjusts according to the person’s behavior. At the moment, the system is piecemeal and is being piloted across the country by city councils or private tech platforms with access to personal data. So far, some of the punishments include banning individuals from boarding trains or airplanes, denying them access to the best jobs, schools, or hotels, publicly shaming them as bad citizens, among others. Some would call this the beginning of a dystopia.    

Conclusion

Cryptocurrency prices dropped from their peak values from late last year and beginning of this year, and have been on a slow decline up until now. May China’s policies have had an impact? Perhaps. Even with China’s restrictions in place, the country remains a global technological force to be reckoned with. The hope remains that as time goes by, the government may become more susceptive to cryptocurrencies. If you find this information relatively useful, especially if you’re in the Asian region, and you want to look into crypto, then we encourage you to check out our main website for more details regarding our secure, advanced, and multi-asset BCMY digital wallet app.