China may have cracked down on cryptocurrency trading in 2017, but state-run institutions in the sprawling Asian powerhouse have been increasingly turning to crypto’s underlying tech, blockchain.
The latest example of that dynamic comes via the State Administration of Foreign Exchange (SAFE), the nation’s top foreign currency exchange watchdog and the administrator of China’s foreign currency reserves, which as of 2016 equaled more than $3 trillion USD. Per Chinese media outlet CNStock, SAFE has created a blockchain platform designed to optimize domestic trading activities.
Built in collaboration with the Hangzhou Blockchain Technology Research Institute, SAFE’s blockchain will be used to automate and provide real-time transparency in China’s export financing industry.
The distributed ledger platform will initially be trialed in the three regions of Fujian, Jiangsu, and Zhejiang and in the metropolitan centers of Chungking and Shanghai. If all works out well, SAFE will look to unfurl the blockchain system nationwide.
Notably, the blockchain embrace comes as the future of cryptocurrencies remains unclear in Asia’s largest country.
Comes on Heels of Possible Crypto Mining Flex
While SAFE has turned to blockchain tech, the National Development and Reform Commission (NDRC), China’s top macroeconomic administrators, recently published a list that included cryptocurrency mining among a list of hundreds of activities that should be terminated in the nation.
Many saw the move as yet another ax swing by Chinese authorities toward the domestic crypto industry.
It’s not the first time the NDRC has published such a list. Taking it at face value, the document’s inclusion of crypto mining is not insignificant, insofar as approximately 70 percent of the Bitcoin network’s currenty hash rate is thought to originate from within China.
To that end, if Chinese bitcoin miners are eventually forced to close up shop, then the security of the Bitcoin network could acutely and sharply drop. The NDRC will act next on the list in early May, when the period for public comments comes to a close.
However, some analysts have said the apparent mining flex likely isn’t a crackdown but rather a means for the Chinese government to assert further control over domestic miners. One such analyst is Jehan Chu, who works for Hong Kong digital asset firm Kenetic.
Earlier this month, Chu said:
“I believe China simply wants to ‘reboot’ the crypto industry into one that they have oversight on, the same approach they took with the Internet.”
Chinese Renminbi to Become a Crypto? Another Analyst Thinks So
Speaking of China exerting control on its own terms, another analyst, the Blockchain Research Institute in Canada’s co-founder Don Tapscott, recently remarked that China’s fiat currency, the Renminbi (RMB), may one day be underpinned by a private blockchain.
That’s entirely speculation for now, but in light of China’s push toward smart cities in recent years, it wouldn’t be surprising to see the country continue to decisively pivot toward digitization.
China’s neighbors to the north, Russia, has a handful of domestic officials that have been eyeing the creation of a “crypto ruble” since last fall.
Chinese Investors Hot on Crypto Regardless
Chinese government authorities may be antagonistic toward bitcoin, but Chinese investors certainly aren’t.
That’s because, per Chinese media outlet cnLedger, Chinese investors have been paying high prices to nab bitcoin in over-the-counter BTC markets as of late.
1/ Chinese markets reveal strong buys. OTC (Over-The-Counter) trades, the almost only way to buy bitcoin with fiat in China, showing considerable $ premium (1 USDT = 7 CNY) over the official rate of 1 USD = 6.7 CNY. pic.twitter.com/bd0n0DGFVU
— cnLedger (@cnLedger) April 8, 2019
Ever since the bitcoin price shot up over the $5,000 USD mark recently, OTC demand for the OG crypto has spiked among Chinese buyers.
Since such markets are practically the only way to purchase bitcoin in China, a bottleneck of demand gave the bitcoin price a premium of more than four percent there, at least for a time, compared to BTC’s approximate exchange rate in other countries.
As the old saying goes: where there’s a will, there’s a way.