Experts believe China is far from uninterested in cryptocurrency despite its overt efforts at bans of one kind or another. In fact, it is widely believed the communist government is contemplating its own version of a government-backed cryptocurrency. Should that be the case, analysts assume it could potentially be bigger than Bitcoin.
China Creating Government-Backed Cryptocurrency
Moving from speculation to near assurance, UK-headquartered online trading provider, IG Group, posted a subtitle,
“China to introduce a national cryptocurrency.” In all but assuming such was imminent, the report continued,
“In a contradictory move to banning Bitcoin, the People’s Bank of China (PBoC) initiated plans to create its own official digital currency.”
That’s a heck of a statement, and there seems to be little outside of this assertion to verify IG’s claims. The financial group itself has been around since 1974, and it provides clients with educational resources on leveraged FX products and CFDs, hoping they will earn in times of up or down markets.
The company further acknowledges,
“There has been no official statement regarding the national cryptocurrency’s name or launch date, which makes it difficult to prepare for. It would likely be introduced alongside China’s primary currency, the yuan, with the intention of catering to the millions of citizens who lack access to standard banking services.”
The Chinese government has been making noise of late, however. Its Center for Information Industry Development continues to release crypto rankings for some odd reason. It recently inked a crypto regulation deal with South Korea. And with a reported 3 million Chinese citizens continuing to hold their digital assets even despite bans, there does seem to be something of an appetite.
“The PBoC’s vision for its own cryptocurrency is based on taking back control of the finance sector. It has argued that without government control, a cryptocurrency could become a tool for drug dealers and terrorists,” IG insists.
So far, the only government to roll out a state-backed crypto, Venezuela, hasn’t exactly seen dividends. Admittedly, China has over a billion people, and their economy is in far better shape. But there is something to running up against the exact lure of crypto to begin with: folks seek it to be free of government minders. A state crypto just might be the worst of all worlds for those using it. Every transaction would be easily scrutinized, for example.
Before the ban, in fact, China alone was basically the global crypto trading market for all intents and purposes. Just before the huge rise in prices, the government in September of 2017 lowered the boom. Something like 6% dropped off of BTC’s exchange rate, at least in the short term, as a result. The authors do admit,
“It is unlikely that any government-backed cryptocurrency would kill off Bitcoin or other large cryptos completely, but some of the smaller alt-coins could have a tougher time of it.”
However, IG muses,
“The PBoC have stated that only the digital currency issued by them will be recognized nationally, excluding other coins such as Bitcoin or ether. As foreign cryptos are already banned in China, the government would essentially force mining operations to switch to the national crypto. This could impact global mining communities, and reduce the value of Bitcoin as it becomes less popular. A government endorsement could see the crypto gain popularity worldwide, as it becomes seen as credible in the eyes of the public.”