Charlie Shrem, a bitcoin pioneer and the head of business development at popular cryptocurrency wallet platform operator Jaxx, stated that China has no real effect on the future of bitcoin.
“This China FUD is playing on all your fear, uncertainty and doubt. China has no real effect on the future of bitcoin. Bitcoin is about censorship free and an alternative non govt controlled financial system. China’s relevancy is diminishing by the day. They overplayed their hand and there is a reason they are being ambiguous. The only power they have over bitcoin is the power you give them. Bitcoin puts a financial system back in our control.”
China is Losing Relevance in the Global Bitcoin Market
Earlier this month, the Chinese government, the People’s Bank of China (PBoC), and local financial regulators imposed a nationwide ban on bitcoin exchanges and trading platforms. OKCoin, Huobi and BTCC, the three largest bitcoin exchanges in China, were requested to terminate and halt their operations by the end of October, while other exchanges were forced to shut down their platforms by the end of September.
Since November of 2016, Chinese bitcoin exchanges closely cooperated with the Chinese government and its central bank to establish a robust, resilient and stable cryptocurrency exchange market by complying every single request made by the PBoC. In return for being compliant, competent, and transparent companies, Chinese bitcoin exchanges were unfairly punished.
As Shrem explained above, the Chinese government and local regulators have the ability to restrict trading activity around bitcoin and other cryptocurrency but are not capable of restricting and censoring the usage of cryptocurrencies. Shrem noted that the Chinese government “overplayed their hand” by utilizing the only leverage it had over the global bitcoin industry.
But, the global bitcoin exchange market is restructuring. The vast majority of trading volume from the Chinese market has moved to Japan and South Korea, two countries that have implemented efficient and practical regulatory frameworks for both cryptocurrency businesses and investors. In fact, earlier this week, the South Korean bitcoin exchange market officially overtook China to become the third largest bitcoin market in the world, behind Japan and the US.
Through the imposition of a nationwide ban on bitcoin exchanges, the Chinese government has further isolated itself from the global bitcoin industry and as Shrem explained, the relevancy of the Chinese market will inevitably decline. In the upcoming months, the exit of the Chinese bitcoin market will only fuel the Japanese and South Korean markets, which are already preparing to serve institutional and retail investors.
Governments Can EIther Create Efficient Regulations For Bitcoin Businesses or Isolate Themselves From the Market
In May, at the Blockchain NZ conference held in Auckland, New Zealand, prominent bitcoin and security expert Andreas Antonopoulos stated that governments could either worsen their cryptocurrency trading markets or take the right approach to create an even playing field for companies. Through its ban on Chinese bitcoin exchanges, the Chinese government has lost its market share over the global bitcoin exchange market to neighboring markets and in the near future, China will become a minority in the global bitcoin industry.
“Governments can choose to either do nothing – which is okay; make things worse for cryptocurrency trading – like what Australia did by imposing sales taxes on all cryptocurrency transactions; or they can make things easier for companies by reining in the banks and encouraging companies by creating a level playing field,” said Antonopoulos.
After Antonopoulos released the statement, the Australian government officially removed double taxation on cryptocurrency transaction and promised efficient regulations for cryptocurrency businesses in an attempt to revive its bitcoin and blockchain markets. However, it has become evident that it is too late, as most businesses and trading volume have moved from Australia, which was once a major bitcoin market, to Singapore, Hong Kong, Japan and South Korea.
Featured image from Flickr.