China May Overturn Cryptocurrency Ban in Favor of Regulation
An editorial in a leading semi-official Chinese newspaper has advocated relaxing the country’s cryptocurrency trading and initial coin offering (ICO) ban, possibly indicating a softening of Chinese crypto regulations.
According to a May 30 editorial in the Global Times, a newspaper owned by China’s official newspaper the People’s Daily, “fears of a Bitcoin bubble” and the resulting “fencing off” of Bitcoin exchanges may “leave China behind in the digital currency revolution.”
The Chinese government announced a ban on ICOs and fiat-to-crypto operations on Chinese territory in September 2017. Although many Chinese exchanges, such as Huobi, OKex, and Binance, saw large drops in volume, their crypto-to-crypto trading operations continued and eventually allowed these exchanges to become the largest in the world. 24-hour trading volumes for all three exchanges exceed $1 billion.
Many Chinese citizens continue to access major Chinese exchanges and perform trades by using virtual private networks (VPNs), services that mask IP addresses.
Despite the “highly speculative” nature of cryptocurrencies, the Global Times editorial argues that rules and regulations can ensure that cryptocurrency “works in the economy's favor.” The editorial points to the active involvement of US regulators in the crypto space, including a recent US Department of Justice (DOJ) investigation into Bitcoin price manipulation, which the author claims “reflects a more proactive stance” that “will contribute to digital currency sophistication in the world's largest economy.”
The editorial concludes that China should follow suit and “lay the regulatory groundwork for its rise as a future digital currency trendsetter.” Whether China will adopt any policy changes remains to be seen.