China’s Position on Cryptocurrency Is Gradually Shifting
In between social media censorship of crypto exchanges and blocking access to international trading platforms, Chinese authorities are considering ways to take decentralization out of decentralized currency. At least two high-ranking officials have remarked recently on the need to centralize blockchain, offering strong evidence that cryptocurrencies could see the light of day in China at some point in the near future.
State-Backed Trading Platform?
Chinese politician Wang Penjie told a conference earlier this week that a state-controlled digital currency platform should be considered. Wang’s remarks, which were raised at the People’s Political Consultative Conference (CPPCC), proposed a strict “approval system” for digital assets, as well as rigorous vetting of all traders.
CCN has quoted the following statement from an official CPPCC report:
“[A]fter sound domestic laws and regulations, under the unified cooperation of the Central Bank and the CSRC, a regulated, efficient and clean blockchain digital asset trading platform will be set up for enterprises to raise funds [and trade digital assets.”
Chinese securities regulator Zhang Ye has also remarked about the need to centralize blockchain technology, arguing that “absolute decentralization” would not work. Zhang, who serves as director of China’s Securities Regulatory Commission, issued the following statement at a recent conference in Beijing:
“[F]rom a technical point of view, the absolute decentralization of the blockchain is not valid because the blockchain itself is a software and the software must be centralized,” he said, according to a rough translation. “Therefore, how to build a decentralized system based on a centralized structure needs further study.”
Though the idea of a centralized blockchain for digital currency does not appeal to most crypto purists, China’s position on the subject is slowly changing. This reflects the largely bullish outlook on blockchain emanating from Chinese industry.
Zeng Ming, who heads the Academic Committee of Alibaba Group, recently referred to the blockchain as a “revolution in the relations of production,” adding that it will “inevitably bring about major changes in productivity and a true supply-side revolution.”
The Chinese government issued a blanket ban on cryptocurrencies and initial coin offerings (ICOs) last September. At the time, the move was considered a major blow to the future of the crypto industry. However, it didn’t take long for the market to recovery and, over the next five months, set multiple record highs.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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