The People’s Bank of China (PBOC) and the Shanghai commerce commission have issued a joint statement signaling their support for blockchain use in commerce.
China Goes All-In on Blockchain
According to the agencies, decentralized technology can be used in trade finance to resolve asymmetries and validate transactions.
In the published document, the two government institutions underscore the cost-effectiveness of blockchain systems, while affirming their appropriateness in international trade.
Just two weeks ago, Chinese President Xi Jinping proclaimed the need to develop blockchain technology. Speaking at a gathering of the Political Bureau of the Central Committee officials, Xi said that blockchain applications could be used in a myriad of sectors. He listed digital finance, intelligent manufacturing, supply chain management and digital asset trading, among them.
The president additionally urged researchers to take a top-down approach in development. His pro-blockchain and crypto sentiments sparked a 20% bitcoin price rally within 48 hours.
Xi’s remarks are believed to have marked a U-turn in policy towards cryptocurrencies. The Chinese government has, in the past, threatened to outlaw some crypto-affiliated activities such as cryptocurrency mining, but authorities have now confirmed that there will be no such crackdown. This is according to the latest communique released by the National Development and Reform Commission (NDRC).
China’s President Xi Jinping gave credibility to blockchain and crypto by calling the country to accelerate blockchain adoption, said Galaxy Digital CEO Mike Novogratz. pic.twitter.com/bo6epT2fvw
— Gabriellyan (@GabriellXL99) November 6, 2019
The Central Bank is Working on Own Cryptocurrency
The Central Bank of China is reportedly on the verge of launching its own cryptocurrency. The Bank of China and the Agricultural Bank of China will be among the first institutions to receive the digital tokens. Alibaba, Tencent, and Union Pay are also alleged to be in this premier group.
The project concept rivals that of the estranged Facebook Libra network, which has been facing increased criticism from U.S. legislators. Beijing’s state-backed crypto asset is expected to globalize the Chinese national currency.
The digital Yuan platform is set to gain significant traction once it’s launched because China is a dominant e-commerce powerhouse. The fact that the program is directly supported and controlled by the government also eliminates major regulatory hurdles.
China Influences the Crypto Industry but Major Boon Unlikely
Changes in China’s approach to digital assets have already impacted the bitcoin market to some extent and caused a mini price-jump. It is worth noting that the cryptocurrency culture in China is among the most developed in the world. The country is home to the biggest bitcoin mining pools, as well as leading miner foundries such as Bitmain and Canaan Creative. Before the crypto trade ban, China accounted for 90% of all bitcoin trades.
That said, however, the recent pro-blockchain developments will not make a significant impact on markets in the long-term because the Chinese government has yet to lift its ban on cryptocurrency trading. Such a move is guaranteed to push prices.
Moreover, the administration has never really banned crypto mining. It has almost always supported blockchain development projects, so not much has changed in reality except that there is an official announcement that removes uncertainty.