The past week has seen various significant developments in
terms of how blockchain technologies will be perceived and developed in China.
On October 25, it was reported that Chinese President Xi
Jinping had described the technology as an ‘important breakthrough’, with more
developments needed to accelerate the sector, as well as greater interoperability
between blockchain technologies, artificial intelligence (AI), and the Internet
of Things (IoT).
Xinhua, China’s state-run press agency, put it this
way. “Noting that China’s blockchain sector has a sound foundation, Xi
stressed expediting the development of blockchain technology and
innovation-driven industrial development. More efforts should be made to strengthen
basic research and boost innovation capacity to help China gain an edge in
theories, innovation and industries of the emerging field.”
There was more to come. Reuters
reported a Chinese central bank official who said commercial banks should ‘step
up their application of the technology to embrace digital finance’. Cryptocurrency-focused
news resource cnLedger noted that
articles expressing concern over the validity of blockchain were being purged,
while companies who had publicly claimed investment in the technology – cloud software
firm Xunlei was cited by cnLedger – saw serious market gains.
As reported
by the South China Morning Post, the Communications Industry Association proposed
that October 24 should become ‘blockchain day’, quoting a committee spokesperson
who said President Xi ‘blew the horn of progress for the future.’
This naturally makes a significant change from the country’s
previous stance. More than two years have passed since
China banned ICOs, while in August last year, as this publication put it,
China’s ‘wider crackdown on activities related to digital money’ saw a
blanket ban on more than 100 offshore cryptocurrency exchanges.
So what does this mean – and what should the industry look
for?
While many stocks have gone up, analysts point to a
potential downturn when it comes to crypto in China. TRON, which last week announced
its integration with Samsung’s Blockchain Keystore, surged 30% at the start
of this week for instance, which did not go unnoticed
by project CEO Justin Sun.
Bitcoin, however, is presumably in a safer position. As reported
by Decrypt, a ruling in July from Hangzhou’s Internet Court found the
digital currency can enjoy a legal status at the same level as physical assets.
The case, albeit going against the plaintiff, saw the judge rule that Bitcoin –
and crypto at large – should be considered ‘virtual Internet property’, in
legal terms.
Writing on Twitter, economist Alex Kruger argued the odds of
China supporting public blockchains with tradeable tokens which can be used for
speculation and moving money out of China were ‘close to zero’. “China is not
interested in decentralisation but in control,” Kruger wrote.
This threat was noted by an anonymous ‘Bitcoin dissident’, as
Coindesk put it, who warned of repercussions against a fully integrated
blockchain-based financial system controlled by the Chinese government. “We do
need to think about ethics when it comes to these things,” they said. “If the
value is something a totalitarian state can take hold of and use to track every
single person and what they’re doing, enforcing the strictest currency
controls, then this is what they are going to do.”
Following the president’s remarks, the state-run People’s Daily newspaper urged caution in a commentary piece. “Blockchain’s future is here but we must remain rational,” the commentary read. “The rise of blockchain technology was accompanied by that of cryptocurrencies, but innovation in blockchain technology does not mean we should speculate in virtual currencies.”
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The post Analysing China’s about turn on blockchain – and what could come next appeared first on The Block.
Credit: Blockchain News
