An official currency of China is slated to become a digital asset, according to a leading analyst.
China and Crypto: A Rocky Relationship
Donald Tapscott – executive chairman of the Blockchain Research Institute – claims that the currency renminbi (RMB) will likely become a cryptocurrency in the coming years.
China has not had a stellar relationship with digital assets in the past. Last year, the country banned all crypto-based trading and limited exchange platform activity expressing concern over malicious behavior (i.e. hackings and theft) and the volatile nature of digital currency prices.
In addition, the country has released a list of environmental hazards its looking to stop in the coming years. Among the items listed was bitcoin and cryptocurrency mining, though it’s unclear when (or even if) China will commit to this. China has been releasing similar lists for years and done little to nothing about these alleged hazards, so it’s difficult to say if bitcoin mining really has no place in China’s future.
The list has been put forth by the National Development and Reform Commission (NDRC), an organization that seeks to remove anything that has produced safety concerns, “seriously wasted resources” or “polluted the environment.”
By contrast, current Chinese president Xi Jinping has commented that blockchain – the technology underlying all forms of crypto – is among the most “important technologies for the future of the country.”
Tapscott says he recently met with the vice-chairman of the Communist Party in China. Among the topics discussed was the alleged oncoming ban. He states:
It’s not really necessary to do that [to ban exchanges and mining] because in 20 years we are not going to be using bitcoin in China. Chinese people will use the RMB, only the RMB will become a cryptocurrency. The central bank of China will turn it into a digital currency.
Tapscott also had much to say regarding digital financial exchanges. He exclaimed that not only can they do business in China, but that they’re likely to dominate central exchanges thanks to their transparency and abilities to detect “bad behavior.” He says that virtually all assets, even securities, will eventually make their way onto decentralized exchanges.
What Will China Lose Through a Mining Ban?
China has taken a harsh stance against cryptocurrencies, going so far as to ban initial coin offerings (ICOs) in 2018. At the same time, the country does serve as a global crypto hub, with roughly 60 percent of new bitcoins being mined and emerging from Chinese mining pools. The country’s main crypto-mining company, Bitmain, controlled as many as 11 separate mining farms in China by mid-2018.
Should the NDRC ever set forth a bitcoin mining ban, Bitmain and other giants like it could suffer greatly, and China would lose one its biggest revenue sources. China is also a leader in the blockchain space, with a reported 263 blockchain projects occurring at the time of writing.