Stop or Go? The Confusing State of Cryptocurrency and Blockchain in China
China has a strange relationship with cryptocurrency. On the one hand, the country has banned all crypto exchanges so trading has to happen OTC (Over the Counter) — via brokers instead of digital platforms. Despite these regulations, China is home to some of the world’s largest Bitcoin mining operations, and the CCP (Chinese Communist Party) is fully behind blockchain technology. In fact, China will probably be the first major country to release a digital version of its currency. So it’s a complicated relationship that China and crypto have, and in this article, we’ll try to make things clear for you.
Legal Status of Crypto in China
The Chinese government, led by President Xi, is bullish on blockchain. The following quote is from a recent speech that Xi gave, addressing blockchain technology:
“Greater effort should be made to strengthen basic research and boost innovation capacity to help China gain an edge in the theoretical, innovative, and industrial aspects of this emerging field.”
China also believes that blockchain will eventually be integrated with artificial intelligence technologies as well as other financial and eCommerce applications like Wechat Pay and Alibaba. The key point, however, is that the Chinese government is bullish on blockchain, not crypto. Cryptocurrency trading is illegal in the country, and if cryptocurrency usage takes off in China, it’s likely that the government will take steps to prevent crypto usage.
One of the few exceptions may be the cryptocurrency NEO which is often referred to as the Chinese Ethereum. NEO is a Chinese project which attempts to work with regulators rather than dodging the law. Although NEO has a different consensus mechanism than Ethereum, it’s still a smart contract platform and can host initial coin offerings and dApps.