China has not cracked down on bitcoin

Amid bitcoin’s continued price volatility, which has been attributed to fluctuations in investor activity in China, more detail has emerged on the meeting the People’s Bank of China (PBOC) held with several bitcoin exchanges last week, according to Reuters.

Since the meeting came at a time when the country is seeking to stem capital outflows, there was speculation that regulators’ attention was turning to bitcoin, with potential limits on outflows to follow. However, the bitcoin exchanges involved have rejected such theories, saying instead that the purpose of the meeting was to reiterate the importance of platforms’ abiding by existing relevant regulations.

But the widespread proliferation of bitcoin in China may lead to new regulation in the future. China is indisputably the location of the majority of global bitcoin trading, with domestic exchanges claiming they account for more than 90% of global trading volume. So long as that’s the case, the PBOC will likely keep a close eye on the cryptocurrency.

If bitcoin continues to trade at such high volumes in China, regulators will likely feel they have no choice but to issue bitcoin-specific regulations in the future, with any such regulation designed to protect the interests of retail investors. That could be problematic for exchanges, particularly if the amount retail clients can invest is restricted, as they monetize by taking commission.

Blockchain technology, which is best known for powering Bitcoin and other cryptocurrencies, is gaining steam among finance firms because of its potential to streamline processes and increase efficiency. The technology could cut costs by up to $20 billion annually by 2022, according to Santander.

That’s because blockchain, which operates as a distributed ledger, has the ability to allow multiple parties to transfer and store sensitive information in a space that’s secure, permanent, anonymous, and easily accessible. That could simplify paper-heavy, expensive, or logistically complicated financial systems, like remittances and cross-border transfer, shareholder management and ownership exchange, and securities trading, to name a few. And outside of finance, governments and the music industry are investigating the technology’s potential to simplify record-keeping.

As a result, venture capital firms and financial institutions alike are pouring investment into finding, developing, and testing blockchain use cases. Over 50 major financial institutions are involved with collaborative blockchain startups, have begun researching the technology in-house, or have helped fund startups with products rooted in blockchain.

Be the first to comment on "China has not cracked down on bitcoin"

Leave a comment

Your email address will not be published.