When I participated last week at the Blockchain Open Forum in Seoul, South Korea, where China’s first crypto exchange BTCC CEO Bobby Lee told us that people in China are still trading cryptocurrencies even after the Chinese government imposed a strict ban on crypto trading in September 2017.
Regulatory State of Crypto in China is still unclear
It is still very obscure how the blockchain and cryptocurrency sector is treated in China. The country’s government banned cryptocurrency trading in autumn last year to avoid outflow of the Chinese Renminbi to other major countries. However the government supports local blockchain projects and public blockchain protocols like Ethereum ever since.
In April 2018, the government of Hangzhou, one of the more active regions for technology development and innovation, backed a $1.6 billion blockchain fund to finance emerging startups working on commercializing and implementing sophisticated blockchain-related solutions.
Two months after the investment of the Hangzhou government in a 1,3 billion dollar blockchain fund, China Central Television (CCTV), a state television network controlled by the government, reported that the blockchain has the potential to become 10 times the value of the Internet with wording that demonstrated absolute certainty from the Chinese government about the long-term success of the blockchain.
“Blockchain is the second era of the Internet. The value of blockchain is 10 times that of the Internet. Blockchain is the machine that produces trust”.
For speculators and investors outside of the Chinese cryptocurrency market, the government’s support towards blockchain projects and its antipathy for cryptocurrency trading may be difficult to evaluate.
It has been evident based on the initiatives led by the Chinese government that it is highly optimistic towards the blockchain. Bobby Lee, the CEO of BTCC, said at the Blockchain Open Forum that the ban on cryptocurrency trading imposed by the Chinese authorities can be attributed to the idea that the value of major digital assets is currently overvalued and an outright ban on trading would cause the price of cryptocurrencies to decline.
Lee made clear he believes the market will continue to operate freely in the global space, with minimal impact and interference from the Chinese government. Lee also revealed that many investors and traders within China are still initiating cryptocurrency trading, adding that the volume of cryptocurrencies in China continues to remain high after the ban.
In February 2018, Hong Kong-based mainstream publication South China Morning Post reported that the Chinese government ordered its banks to completely stop cryptocurrency trades by cutting out services to exchanges. The government requested foreign platforms to stop providing services to local users as well.
Demand is Still There
While the official China banned cryptocurrency trading, the demand for digital assets is increasing daily, partially fueled by the government’s optimism towards the cryptocurrency and blockchain sector.
Lee concluded that the rising interest towards digital assets as long-term investments signify the acknowledgment of cryptocurrencies as a new asset class that can co-exist with the current financial system.
Bobby Lee is the co-founder and CEO of the first and definitely one of China’s biggest bitcoin exchanges, BTCC. All cryptocurrency exchanges have been closed down by the Chinese government last year. Lee said he is lucky that he was able to travel and visit the conference in Seoul. He heard that some other founders of Chinese exchanges still apply for their passport.
He believes there are two reasons why Chinese trade so heavily and intensively although officially not possible:
- Chinese love of investing and
- the popularity of bitcoin mining in the country.
“Chinese people lack a lot of opportunities to invest,” Lee told Business Insider. “Bitcoin is a high-growing, volatile asset class. In some ways, it’s a very ripe opportunity for day trading to make money.”
Swings of 5% or more in a single day for bitcoin are not unusual, representing an opportunity for speculators to make a quick buck on the currency — or of course stomach a sizeable loss.
Pictures: CryptoRobby 🦋