This law coincides with President Xi calling for China to get more aggressive on the blockchain front. He wants the country to focus its attention on blockchain development; seizing the opportunity to gain a technological advantage over slower developing countries.
China has a mixed relationship with cryptocurrency; even though this law does not specifically mention cryptocurrency, it does cover all aspect of cryptography, meaning that all will fall under these regulations. China is one of the leading countries in crypto mining even though it is basically outlawed by the central government. Exchanges also saw their wings clipped over the years as the government took a hard-line stance against the entire industry.
The Chinese people seem a lot more accommodating towards crypto, especially Bitcoin. The government is surely upset at the fact that many of the wealthy in the country used Bitcoin as a vehicle to get their wealth moved. With the Chinese currency being manipulated in a way that caused uncertainty, many of China’s elite opted to hedge their bets by holding Bitcoin.
Mark Zuckerberg, who was in front of a committee in the House of Representatives, used what China is doing as a justification for the Libra. While it is not likely that the politicians are going to buy this one, he is correct in the fact that China is looking towards a centrally based digital currency. We are basically looking at the Yuan in digital form.
China is going to do all it can to help break the USD as the world’s reserve currency. While the present system is extremely beneficial to the United States, China is seeking to become the global leader. To achieve this end, it most likely has to burst the USD bubble.
The Chinese population is primed to take the next step in the evolution of money. It is already one of the leading countries in terms of mobile payments. Cash is basically dead in this country. The population tends to be technologically advanced meaning that online payment systems are very popular. Most of the social media applications include a payment platform. WeChat is one of the largest in the world.
This is the same premise that Zuckerberg and Facebook are trying to create. They want the social media giant to have its own token which all transactions on the platform use. With more than a billion users, this would make it one of the most widely used currencies in the world.
It is also the reason why many regulators around the world are trying to stop the development of the Libra. They realize the USD is threatened and central banks would lose all control. This is something that, those presently in power, are trying to navigate. Giving up control is not on their agenda.
President Xi feels that blockchain is crucial for China’s success going forward. Even though China banned ICOs in 2017, Xi sees the opportunity to control the investment in the countries technology. This will provide greater incentive to the development of technologies that could propel China into the lead position. He is calling for an aggressive adoption of blockchain across all industries.
It appears we are in the midset of a digital arms race. This is going to be a battle which both governments, central banks, and corporations are all a part of.
China is doing what is necessary to place itself at the head of the pack