China Crypto Roundup (May 18-25): Bitcoin Mining in Sichuan, Hainan Disentangles from Crypto
The Chinese cryptocurrency sphere this week has seen more regulatory developments, including Sichuan’s ambivalent policy towards bitcoin mining, Hainan making clear its blockchain-not-crypto stance.
As the country is in its political season with the start of its largest political event Two Sessions started this past week, more regulatory advice will be seen from representatives in all professions, including regs around cryptocurrency and blockchain.
Sichuan’s ambivalent policy towards bitcoin mining
When it comes to the crypto mining activities, the local governments of the world’s bitcoin mining capital Sichuan province have been ambivalent for years.
Considering the recession caused by the coronavirus outbreak, bitcoin mining is deemed as a lucrative industry that could bring economic benefits for local and tolerated in the Sichuan province during the wet seasons when hydropower plants generate more electricity.
In early May, multiple local governments in Sichuan including Ya’an and Garze have shown their public support for and encouraged bitcoin mining operations to help consume excessive hydroelectricity during the rainy season which could also help make up for the economic losses caused by COVID.
But the good days don’t last long. Some bitcoin miners in Sichuan claimed that their power supply were cut off for electricity shortages as rainy season delayed and high temperatures continue. Following that, a notice soon surfaced indicating that the province’s top finance regulator Sichuan Financial Office requests local governments to make an orderly exit from supporting bitcoin mining
Though many believe the ban from the provincial level will not be enforced by low-level administrations for their reliance on miners to contribute to their economy, regulations and activities in Sichuan, a province alone responsible for over 50% of global bitcoin hashrate, is worth watching.
Hainan disentangles itself from crypto space
China’s Hainan, considered as the country’s crypto island as local governments keep a positive attitude towards the industry with major crypto exchanges like Huobi and OKEx setting offices there.
While in a recent press release, Hainan’s information and technology department announced that enterprises who are working on blockchain cannot trade in or act as a medium for crypto trading as well as providing serves such as pricing and information intermediary.
The notice dispels most bitcoiners’ fantasy about the island which is thousands of miles away from Beijing becoming an experimental testbed for cryptocurrency. But the same question comes: whether the orders from top-level regulators will actually be followed through, considering the multi-level regulatory governance at lower levels and sophisticated businessmen’s subtle ties with local regulators.
Government advisers propose regional stablecoin
Apart from proposals around blockchain, most of which remain on paper with no actual use cases but more like a response to the country’s president’s blockchain endorsement last October, the proposal from Neil Shen, founding and managing partner of Sequoia China and a member of China’s upper house, has attracted much attention from the crypto community.
Shen proposed to Chinese legislators during the Two Sessions a regional digital currency in Hong Kong’s Greater Bay area that could be used to facilitate cross-border transactions among four major Asian countries.