Yuan Accounts for Less than 1% of Bitcoin Transactions, but Chinese Nationals are Still Trading Cryptocurrency
China’s comprehensive ban on cryptocurrency trading has had its desired effect: the yuan renminbi now accounts for less than 1% of global bitcoin transactions.
Yuan Transactions Down
Once the dominant quote currency for bitcoin, the yuan is no longer being used to facilitate fiat-to-crypto trades, according to new data from the People’s Bank of China (PBOC). The central bank disclosed the data Friday through the state-run Xinhua news agency, which showed that the yuan accounts for less than 1% of bitcoin trades from a peak of more than 90%.
Last September, China’s central bank issued a blanket ban on domestic cryptocurrency exchanges and announced a zero-tolerance policy for initial coin offerings (ICOs). Over the past ten months, regulators have also stepped up efforts to limit access to foreign digital currency exchanges.
The PBOC says it has ensured a zero-risk exit for 88 cryptocurrency exchanges and 85 ICO trading platforms, according to Xinhua.
A blockchain analyst by the name of Zhang Yifeng believes that China’s ban had a positive impact on price volatility:
“The timely moves by regulators effectively fended off the impact of sharp ups and downs in virtual currency prices and led the global regulatory trend,” Zhang said, as quoted by Xinhua.
Though hardly impartial, Zhang’s point has been well observed in recent months. As Hacked reported in June, bitcoin price volatility has declined to its lowest level in a year amid a months-long bottoming process that may still be underway.
China’s Cryptocurrency Revolution Still Underway
The central-bank ban on cryptocurrency trading accounts has not deterred Chinese nationals from investing in the alternative asset class. Residents of China are now taking their money overseas to access high-quality crypto investments, with Singapore emerging as one of the hottest destinations.
As Hacked reported last month, Singapore may be home to thousands of token investment funds run by Chinese nationals. This has been further corroborated by Chen Xianhu, a local agent helping Chinese citizens establish foundations in the tiny city-state.
Singapore has established easy entrance requirements for investors wishing to access crypto-based investments. Setting up a foundation in the country costs just 10,000 RMB, which is equivalent to roughly $1,975 U.S.
Several Chinese investment analysts believe their country will be a major contributor to bitcoin’s next bull market. This will be facilitated by China’s massive global diaspora and growing middle class, which has easy access to jurisdictions with more favorable crypto regulations.
It’s not entirely clear whether China will continue to rule cryptocurrency with an iron fist. Last year, the PBOC established a cryptocurrency research lab designed to explore practical applications of blockchain technology. The lab has already submitted 41 patents focused on cryptocurrency payment systems and related technology, according to information obtained from the State Intellectual Property Office (SIPO).
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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