Chinese President Supports Cryptocurrency

Chinese President Supports Cryptocurrency

By Benson Toti - min read

China has put a notional version of support behind blockchain in a recent announcement of their intention to seize the opportunity the new technology presents. As a country, they have become leaders in mining technology while banning Bitcoin and failing to embrace the actual innovations blockchain technology can provide until now. 

A bill was signed into action on Saturday that will change the regulatory landscape in China starting on January 1st, 2020. The goal is to push for more innovation, and the proposal goes on to say: 

“Clear guidelines and regulations are needed to evaluate commercial cryptography technologies used in the major fields related to the national interest as the current ‘loose’ system is not suitable for the industry anymore.”

Xi Jinping, the President of the People’s Republic of China admits that the technology has a broad swath of potential uses, especially within China where there are so many unbanked individuals. His new directive is: 

“[We must] clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation.”

As the first known mention of blockchain technology by Jinping, this is a momentous moment. The top-down approach he is advocating for would bring a blockchain-based training and education program to the country. 

China’s Outdated Stance

This is a surprising turn of events considering the fact that China is generally viewed as being very unfriendly to technology that enables freedom of speech or the free flow of money. Cryptocurrencies are generally viewed as democratizing money, which is in direct opposition to the position China is normally in. 

The likely reason for this position is that China’s elite have realized blockchain is coming and there is nothing they can do to suppress it. So instead, they are changing their angle in order to have greater control over the technology when it does come into place. 

China does have a digital renminbi in develop, but cryptocurrencies are currently banned in China, so there is  a regulatory lack of support at the moment. A change in the legislation will be necessary before this project can move forward much further. 

Many view this as a technological arms race with parallels to the space race of the 1960s. Both the U.S. and China have remained very unfriendly environments for cryptocurrency, and one may be able to get a definitive advantage by bringing a solution to market first. Additionally, with Facebook’s Libra project currently up in the air, this remains more important than ever. 

Price Spike Above $10K

This has caused a spike in the price of Bitcoin above $10K for a short period of time. It seems like Bitcoin bulls were just waiting for a reason to go long on the cryptocurrency, and this announcement made it possible. 

Even though Jinping triggered a bull run, it is unlikely this announcement will affect the short-term viability of the coin at all. However, in the long-term this would make it much easier for the Chinese population to put money into the ecosystem, therefore adding a lot to the coin’s usability.