Here’s What’s Going On In China With The Cryptocurrency Regulations And Bans

Over a week ago now, rumors started circulating on Chinese websites that China was going to ban ICOs (Initial Coin Offerings.) If you aren’t familiar with ICOs, they have officially surpassed venture capital to fund more businesses in the last few months than all of the VC money combined.

These rumors, coming mainly from a Chinese site called “Caixin.com,” stirred things up in the community quite a bit. The ICO ban rumors on the site caused some momentary chaos in the blockchain and cryptocurrency space. Then, a few days later it was revealed that most likely what was actually happening was that they were simply going to regulate the ICOs (as the U.S., Russia and others are doing,) and will have a formal registration process. Not a permanent ban them altogether. Regardless of what you believe they will eventually do or not do there are some important things you need to understand.

First of all, I’m sure you know that Facebook, Twitter, Google and basically all known western tech companies are banned in China. They have their own versions since in most cases the government benefits more from that than supporting the western tech companies.

In an unrelated but interestingly timed recent report, China has allegedly banned various soft cheese imports. Yes, soft cheese. “The entire Chinese market for soft cheeses is now closed,” according to William Fingleton in an article on CNN. Fingleton is in charge of the Delegation of the European Union to China.

It seems like China will ban things that hurt their bottom line or they can’t directly control. And once they find a way to control it, they open it back up. It seems like this is playing out in cryptocurrency and ICOs right now as well. I wouldn’t be surprised if they eventually enforced some kind of temporarily ban, until they find a better way to control things in their country. But regulation, as I will explain shortly, is not a bad thing and can actually bring in more money into a market. And personally, if I were betting, I would bet that soft cheese will exist in the future in China as will Bitcoin, cryptocurrency and ICOs.

The cryptocurrency world being a mostly unregulated space tends to get a lot of misinformation spread with the intention of manipulating the market. When negative information spreads that is not true or the whole story it can cause panic. The people that have shorted the currency profit by being able to buy back in at lower prices. They know that misinformation that they were spreading would never really pan out in a way that affected anything in the long term and they ride the wave back up. I’m not saying that what is happening here is entirely misinformation, it could be a partial truth.

The lack of sources around the alleged China bans and regulation is the issue. Until we have official word from the Chinese government explaining exactly what is happening, it’s all a guess and misinformation will continue to circulate. Those same actors will continue to profit by trying to cause a panic with the public. According to a report on Harvard’s website, even the Chinese government has been known to take part in public manipulation for gain.

The same thing happened in the U.S. before the SEC gave some explanation as to their exact thinking. Then, once they came out with a statement, it was clarified (to a degree) and it was different than many people were thinking. There were a lot of rumors that they would ban ICOs altogether as well, which did not happen. Instead, they just wanted to regulate it. Personally, I think regulation is the route China will take too, which again is not a bad thing. I don’t think China actually hates Bitcoin or will outlaw it completely. In fact, I think they love it and just want to find a way to capitalize most effectively.

Russia has also come forward as a supporter for Bitcoin. As the U.S. did they just want to regulate it and the ICOs. This is not necessarily a bad thing, in fact, regulation is good for the community as it will cut down on scams and “cash grab” ICOs. A cash grab ICO is a poorly formed ICO with the intention of ripping off the public and not delivering on their promises.

My overall guess as to the outcome with China is that they will eventually release an “official” China backed exchange or endorse some of the already existing ones that they can best control, and allow cryptocurrency to be exchanged only on those exchanges.

Once China goes through the regulation process, it will just bring more cryptocurrency investors to the table. A proper approved commodity is more appealing to the general public, even if quantity is limited. China has a large population and that kind of regulation will bring the masses. Although, I don’t see them being able to stop people from engaging in black markets, even if they do try to enforce a temporary ban.

Russia recently vowed to legalize cryptocurrency and came out with a statement from the Russian Finance Minister Anton Siluanov. He said, “The state certainly understands that cryptocurrencies are a reality, there is no point in prohibiting them. It is possible to regulate them, so the Finance Ministry will draw up a bill by the end of the year.”

The last interesting bit of evidence is that you would think if the people of Chinese thought a complete ban was coming would be selling, but according to these stats, the demand toward Bitcoin in particular has increased there.

At the end of the day, anything is possible. As I pointed out, just about everything including soft cheese is banned or being banned in China. So don’t be surprised. Just realize that it’s not necessarily bad for cryptocurrency or the blockchain community by any means. Facebook, Google, Twitter, and other western tech companies that are banned in China are doing just fine.

Origin: https://www.inc.com/brian-d-evans/heres-what-you-need-to-know-about-chinas-cryptocur.html

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