China has announced its plan to bank big on Blockchain technology when the president of the country had a press briefing calling for the accelerated adoption of blockchain technology. Since the announcement there has been a surge of new developments coming out of China, first, they passed a crypto law keeping the launch of its CBDC.
One of the oldest Bitcoin wallets, Bitpie, with a significant Chinese user base partnered with China Merchants Bank, giving rise to the speculation that Bitcoin can make a comeback to the world's most populated country.
China had banned crypto exchanges from the country back in 2017 along with a ban on the use of any form of cryptocurrency, but looking at recent developments it might as well look to regulate crypto exchanges as well as for cryptocurrencies.
The main reason for such speculations was a tweet from Binance CEO CZ who made a price prediction claiming Bitcoin might touch $16k soon as it has got the additional support of 1.4 billion people which was a possible reference to China. Binance is also set to open its first office in mainland China in order to capitalize on the growing demands for crypto services in the country.
The Ongoing Trade War with the US could act as a Catalyst
The ongoing trade war between the US and China has surely pushed the cause of digital currency further where China has taken a lead to announce the use of emerging tech in their financial arena. There has been a deal between the two superpowers to avoid demeaning the value of the currency to gain a trade market advantage.
Recently the US President talked about the deal saying,
“We are looking probably to be ahead of schedule to sign a very big portion of the China deal, and we’ll call it to phase one but it’s a very big portion, that would take care of the farmers. It would take care of some of the other things. It will also take care of a lot of banking needs.”
A couple of weeks ago, New York Times reported that the tentatively agreed deal between the two nations would,
“strengthen Chinese protections for American intellectual property and give financial services companies more access to China’s market.”
The signing of the tentative deal for a better flow of trade between the two countries many believe this might prompt China to also open the gates for crypto exchanges. Many market analysts believe the deal about not diminishing and manipulating currency prices leaves no reason for China to keep the crypto exchange ban intact.
China and Bitcoin
Even though Bitcoin is not recognized as a legal tender in China, it still remains the Bitcoin mining capital of the world, as data suggest more than 60% of Bitcoin mining is concentrated in Chinese provinces with cheap and clean power supply available. China can create a whole stream of revenue by simply regulating crypto mining itself and that can pave the path for other markets surrounding Bitcoin.
Bitmain, the largest producer of Bitcoin mining machines is also situated in China, and the country also houses some of the mass producers of semiconductors a necessary element in building mining rigs. Thus, capitalizing on Bitcoin itself can put China at the forefront of Bitcoin adoption.