China is a country known to the West as one that bans all of its products and tries to develop them indigenously. It is considered to be one of the most important players in the cryptocurrency market. The decisions of the Chinese government affect the entire industry, but cryptocurrencies and Bitcoin have been in a dangerous position in terms of regulations. The existing Chinese cryptocurrency laws are pretty strict. Financial institutions are prohibited from using Bitcoin for trading and ICOs are also illegal to conduct in China, which is a huge blow considering the number of people who would’ve helped in the establishment of exchanges had they been allowed to participate. Chinese Bitcoin exchanges were advised to stop operations within the domestic market until licenses would be established for them. In January 2018, the People’s Bank of China, its top financial authority, suggested that Bitcoin mining should be gradually suspended through the influence of local authorities. Chinese media has presented cryptocurrency as a tool for criminals and a money-laundering device, true to their allegiance with all kinds of various bans and reforms pushed forward by the government. They were successful in creating a negative informational background that may have implications on the future of the Bitcoin in China.
SIGH OF RELIEF
Bitcoin (BTC) has gained legal recognition by another Chinese court. This has come as a sigh of relief for cryptocurrency in one of its harshest environments. According to investor Dovey Wan, who is linked to local media, the Hangzhou Internet Court formally described Bitcoin as virtual property on July 18.
It is the second such court to attribute property status to Bitcoin. The ruling came about as part of a dispute between a now-defunct exchange and one of its users who lost funds. For Wan, the case is significant for the viability of cryptocurrency in China, where a blanket ban on trading it has been in place since September 2017.
BTC/USD rallied sharply Friday thanks to the positive comments from United States lawmakers, but let’s not forget that China also influenced the return to form.
WHY DOES IT MATTER?
China has long been the focus of Bitcoin analysts despite the state-imposed halt on using it. When BTC made a comeback in 2019, evidence began emerging that consumers were finding alternative on-ramps to traditional exchanges. This included purchasing stablecoin Tether (USDT) through over-the-counter deals.
According to a local news outlet, Global Times, China’s central bank (the People’s Bank of China) which imposed the 2017 ban did not explicitly disagree with the Hangzhou decision. “Indeed, Bitcoin is virtual property, but it’s not fiat money,” a PBoC official told the publication Friday. These comments sure sound like China has found a middle ambiguous ground as opposed to sticking to their harsh outlook. The comments nonetheless come in stark contrast to the state’s idea on Facebook’s Libra digital currency project, with officials saying they were concerned and had even begun developing a digital currency of their own.