People’s Bank of China Research Lab Has Filed 41 Cryptocurrency Patents So Far
A digital currency research lab created by the People’s Bank of China has submitted dozens of patent applications over the past year, a sign the world’s second-largest economy is planning a more active role in the cryptocurrency ecosystem.
China Invests in Crypto R&D
Over the past 12 months, China’s Digital Currency Research Lab has submitted 41 patents focused on cryptocurrency payment systems and related technology, according to information from the State Intellectual Property Office (SIPO). This includes two new applications submitted as recently as Friday.
The Research Lab was established by the People’s Bank of China (PBOC) to explore commercial applications of blockchain and digital currency payments and to see their integration within the existing monetary system.
The central bank is said to be pursuing hardware and software prototypes that could facilitate a state-backed digital currency. This is further explained by one of the Lab’s earliest applications submitted in November, which outlines the “fundamental flaws” of cryptoassets issued by private entities. The patent called a state-backed cryptocurrency “inevitable” in order to “upscale the existing circulation of the fiat currency.”
Other patent applications submitted by the group are tied to wallet services and crypto-based transactions.
China’a Crypto Crossroads
The applications were filed during a tumultuous period for cryptocurrency in China. Last September, the PBOC issued a blanket ban on domestic cryptocurrency trading and initial coin offerings (ICOs), citing financial risks. Officials widened the crackdown earlier this year by targeting access to foreign digital currency platforms.
Bitcoin miners have also been subject to elevated scrutiny, with various reports indicating a major overhaul of China’s once-booming crypto processing industry. According to Caixin, a Chinese business magazine, the government is no longer offering miners preferential benefits, such as energy subsidies and tax deductions.
Cheap electricity had turned China into the epicenter of a booming crypto mining industry. By January, it was estimated that more than two-thirds of global processing power devoted to bitcoin mining emanated from the world’s second-largest economy.
The country remains a key hub for manufacturers specializing in mining equipment. Bitmain, Canaan Creative and Ebang Capital have emerged as the company’s largest crypto manufacturers. As Hacked recently reported, the latter two companies are planning public offerings on the Hong Kong Stock Exchange.
While it’s not entirely clear how China plans to regulate cryptocurrencies in the future, Beijing’s embrace of central planning suggests policymakers are open to scaling up the industry from within – so long as they can maintain a firm grip on its expansion. This is further demonstrated by the fact that the PBOC’s ban was implemented before the 19th National Congress of the Communist Party of China – an event that is still dominated by the party purists. The Congress, which is held every five years, is usually a showdown between central planning hardliners and party members seeking more liberal reforms.
Although policymakers have succeeded in shutting down domestic crypto operators, Chinese nationals are finding creative ways to access the market. For example, Singapore is now the home of thousands of crypto foundations founded by Chinese nationals. The tiny city-state allows Chinese citizens to set up token investment funds in as little as 15 days at a nominal fee of 10,000 RMB.
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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