Despite banning cryptocurrencies, China is still big on blockchain. The superpower considers blockchain an “important breakthrough,” according to President, Xi Jingping. Whether that’s investment in the metaverse, or its Blockchain-based Service Network (BSN). The latest announcement out of the Communist country only confirms that picture.
According to September 25 announcement, China Daily, an English-language newspaper owned and controlled by the Chinese government, plans an ambitious entry into the world of NFTs. Could this be the start of an opening up?
In September, the Communist Party announced on its website that China Daily was looking for a third-party contractor to build its own metaverse and NFT platform. According to the statement, the goal is to spread Chinese culture using metaverse, VR, AR, blockchain, and NFT technologies.
The announcement states that it must support multimedia content, pricing, bidding, limited-time offers, and multi-currency settlement. The platform, which appears to have the characteristics of an NFT marketplace, will include the “uploading, displaying, and managing digital collections and supports multimedia forms and multiple collection types.”
China Daily’s attempt to build an ambitious new platform follows on from the launch of China’s own state-run “China Digital Asset Trading Platform” on January 1, 2023. A centralized marketplace built on its China Cultural Security Chain.
Because, despite banning all cryptocurrency transactions in September 2021, China has, in fact, been one of the world’s most aggressive adopters of blockchain technology. Although only on their own terms.
In May, the country announced the launch of a national blockchain research center and has set its sights on becoming a global leader in the technology. The Yangtze Delta Region, one of the world’s most important economic zones, is developing its own chain to perform a multitude of tasks, including tying together digital payments, data identification, and streamlining industries like agriculture.
Last year, China unveiled its first national metaverse, VR and AR plan , with the aim creating a thriving virtual reality industry by 2026. (Although, unsurprisingly, China has mostly opted out of open metaverses built on public blockchains.)
But the most intriguing developments have come from the semi-autonomous region of Hong Kong, which abruptly opened up to crypto earlier this year. Whilst the city is notionally semi-independent, its legislative council ultimately answers to Beijing. So, any loosening of crypto regulation would likely have been approved by the mainland.
In August, Hong Kong’s government started granting its first cryptocurrency exchange licenses, which enable companies to provide services to retail crypto traders. The special administrative region has historically served as a gateway for foreign investment and capital to enter China and connect with global markets. Could it perform that role once again with crypto?
The numbers look promising. According to Chainalysis , the city has an extremely active cryptocurrency market despite its small population. Hong Kong received $64 billion in cryptocurrency between July 2022 and June 2023. This is close to the $86.4 billion received by China during the same period, even though Hong Kong’s population is only 0.5% the size.
There have been hiccups, however. An alleged $200 million dollar fraud by the exchange JPEX involving 2,569 victims has spooked some. But, generally, the response from the crypto community has been positive. Is China learning lessons?
Before banning cryptocurrency transactions wholesale, China was, unsurprisingly, one of the world’s largest markets. But as a result of bans, Eastern Asia only accounts for about 8.8% of all crypto activity, despite making up nearly 2 billion people and a third of the global population.
Understandably, crypto stakeholders are eagerly eyeing the big red dragon, hoping for a sudden rush of liquidity and innovation.
Felix Xu, co-founder, and CEO of ARPA Network told CCN he was skeptical about whether China would lift the ban on crypto anytime soon.
“That being said, if it does happen, in the short term, lifting China’s ban on crypto trading could lead to a significant surge in trading volume and possibly a positive price movement for many cryptocurrencies, as China represents a vast market with a deep interest in digital assets,” Xu explained.
Nathan Leung, a crypto educator at Cryptonauts was bullish about the possibility of the country opening its doors.
“If China opened its doors to crypto, I think we would see similar activity as in Hong Kong,” he told CCN. As in the case of Hong Kong, China is often known for its big surprises. “We have seen China ‘ban’ crypto time and time again, and they seem to be very flip-floppy,” Leung concluded.