Insiders Cite Mixed Implications of China’s Anti-Crypto Stance
China’s recent declaration of all crypto transactions as illegal is going to have several mixed implications for stakeholders, some industry experts have said.
In a series of interviews on financial media channel, Bloomberg, the experts touched on what they think will become of the “the most direct, most comprehensive crypto regulation involving the largest number of ministries” in the history of China’s crypto regulation.
The coming together of ten Chinese ministries for this purpose makes the crackdown a national policy going forward, says Adjunct Professor at the NYU School of Law, Winston Ma, who highlights three main reasons why China may be making the regulatory move now.
“One, obviously, is about retail investor protection. China’s retail contributes a big percentage of global crypto trading and many of them do not fully understand the complexity of crypto products and the related leverage in some of the derivative products,” Ma, who is also the author of “The Digital War”, said. “The second part is about carbon neutrality. As we speak, there is a power shortage in China because of the carbon neutrality 2060 commitment due to the shutdown of lots of coal-based power plants. That means, because of the power shortage, even Bitcoin mining based on green energy is not doable. Thirdly, it’s about the launch of China’s sovereign digital currency. China will soon launch its sovereign digital currency. The government makes it clear that only its sovereign currency is the legitimate currency in China.”
He expects there to be more volatility in crypto trading in the coming weeks as Chinese retail investors try to figure out how to deal with existing market conditions. With the message now clear that the Chinese mining players have to go abroad, Ma says the global Bitcoin mining network will be affected too. He also believes that China’s moves with regards to crypto regulation and the digital yuan will become an important reference for many countries considering similar moves in their own countries.
For Caroline Bowler, the CEO of Australia’s largest digital asset exchange, BTC Markets, the soft power move could be a misstep from China. She said that while China has been pulling back from the sphere of influence within the cryptocurrency space, other countries like Iran, Laos and Afghanistan have been moving towards it.
“Where that is concerning to the Chinese is that they have put so much effort into their soft powers which they have been conducting globally particularly if you look at the effort they have done in Latin America,” Bowler said. “As they are pulling back, these countries and regions are moving in. That’s going to cause a problem for them down the line.”
Bobby Lee, founder of Ballet Crypto, sees the latest ban as a further tightening of the crypto policies in China aimed at retaining control over the economy, finances, the inflow and outflow of money.
“But as I’ve said before, this is actually not the final nail in the coffin which will be the so-called making crypto assets illegal to hold as well. That clearly has not happened yet,” Lee said, though bullish of a year-end rally despite the current state of the crypto market.
“I expect Bitcoin prices to break out again in the next few weeks and months. I think it will easily go over $100,000 and depending on how sharp the rally is, it’s also likely to even touch $200,000 or go above that,” he adds, citing that a FOMO rally for Bitcoin has been due for a long term now.