IG Group Says People’s Bank of China Will Create Own Cryptocurrency
The Chinese Government Is Considering Launching A Cryptocurrency “Bigger Than Bitcoin”
Expert crypto analysts believe China is exploring the launch of its own cryptocurrency. Far from being disinterested in crypto, China is “widely believed” to be contemplating its own state-backed cryptocurrency that “could potentially be bigger than bitcoin,” according to a report from Bitcoin.com.
Last year, China banned crypto trading across the country. It was assumed that China was not interested in supporting crypto and was attempting to dissuade crypto use across the country. Now, less than a year later, we’re reporting that it’s “widely believed” China is considering the launch of its own cryptocurrency.
It’s important to note that these reports use terms like “it is widely believed” that the government is contemplating its own cryptocurrency. There are no indications that the Chinese government is ready to launch its own token. In fact, it would be more surprising if China wasn’t at least exploring the idea of its own cryptocurrency.
Nevertheless, some news outlets believe a Chinese cryptocurrency launch is imminent.
UK-based online trading provider IG Group, for example, recently released a report titled,
“China to introduce a national cryptocurrency.” That article goes on to explain that, “In a contradictory move to banning bitcoin, the People’s Bank of China (PBoC) initiated plans to create its own official digital currency.”
Nevertheless, it’s unclear where IG Group gets its information, or what data they’re citing to verify their claims.
Optimists, however, will point to the fact that IG has been around since 1974 and is dedicated to providing its clients with educational resources on leveraged FX products and CFDs. They’re a reputable analyst with a history of providing accurate information across industries.
IG Group acknowledges that the government of China has given no official statement regarding their own state-backed crypto:
“There has been no official statement regarding the national cryptocurrency’s name or launch date, which makes it difficult to prepare for,” explains IG. “It would likely be introduced alongside China’s primary currency, the yuan, with the intention of catering to the millions of citizens who lack access to standard banking services.”
How Would A Chinese State-Backed Cryptocurrency Work?
The IG Group report explains that China will launch a state-backed cryptocurrency to regain control of the financial sector:
“The PBoC’s [People’s Bank of China’s] vision for its own cryptocurrency is based on taking back control of the finance sector. It has argued that without government control, a cryptocurrency could become a tool for drug dealers and terrorists.”
To date, only one sovereign government has launched its own state-backed cryptocurrency. Venezuela launched its Petro cryptocurrency in February 2018. The cryptocurrency is backed by the country’s vast oil reserves. However, the government of Venezuela has not yet seen many benefits of its own state-backed cryptocurrency.
China, however, could be in a significantly better position to launch its own cryptocurrency. The country is home to over 1 billion people and is in far better economic shape than Venezuela.
There’s an obvious problem with a Chinese state-backed cryptocurrency: China’s government has taken a heavy-handed approach to surveillance. The government has been accused of monitoring private WeChat conversations, for example, and strictly controls internet access across the country. It seems extremely likely that a state-backed cryptocurrency would allow every transaction to be monitored by the government.
One of the key benefits of cryptocurrency is being able to transfer value outside of the boundaries of traditional financial or governmental regulations. A state-operated cryptocurrency seems like an oxymoron.
There Are Signs China Is Warming Up To Crypto
After banning crypto trading and exchanges last year, it’s easy to believe that China hates cryptocurrencies and wants to see them permanently erased from society.
However, there are plenty of signs that China is preparing to become the world’s largest crypto powerhouse.
First, the Chinese government-operated Center for Information Industry Development continues to release crypto rankings. The unexpected rankings have been released monthly since the start of 2018. The rankings, interestingly enough, frequently place bitcoin outside of the top 15 best cryptocurrencies, favoring decentralized, application-rich ecosystems like EOS and Ethereum instead.
Another sign is that China recently signed a crypto regulation deal with South Korea. The two countries agreed to setup similar regulations related to cryptocurrencies and initial coin offerings. Meanwhile, a reported 3 million Chinese citizens continue to quietly “hodl” their crypto despite the ban.
Another sign that China is warming up to crypto is the fact that Bitmain, based in Beijing, continues to be the world’s largest crypto hardware company, earning billions of dollars in profit per year. Mining power is becoming increasingly centralized in China, and this will undoubtedly play in China’s favor moving forward.
For all of these reasons and more, there are signs that China is warming up to – even embracing – crypto. That could mean good things for a Chinese state-backed cryptocurrency moving forward.