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When will China Legalize Bitcoin Again? The Impacts on the Market

In September 2017, China conducted a nationwide blanket ban on cryptocurrencies, exchanges, and ICOs.

This had a global impact. After all, before the crackdown, the country of the red dragon accounted for nearly 80 percent of the world’s crypto transactions and ICOs and housed the biggest crypto mining operations. So what happened after the ban?

Well, cryptocurrency development didn’t stop. The miners moved, most going to Mongolia. ICOs registered in Singapore. And the big Chinese exchanges just moved to Japan or Hong Kong. So what’s up with China?

Hope on the Horizon

There is hope on the horizon for miners, investors, and exchanges both in and outside China. As I said, just because the government banned crypto (even if it is the government of the most populous country in the world) doesn’t mean development stopped. Because of this fact, a few new developments have surfaced.

Bitcoin as Actual Property

A business conflict arose over the holding and transferring of crypto assets in China. An unnamed plaintiff signed a contract that allowed the defendant to manage, trade, and invest in a pool of cryptocurrencies on behalf of the plaintiff. As things sometimes go in business, the deal went belly up, and the defendant refused to return the plaintiff’s cryptocurrencies.

A local news outlet reported on a ruling by the Shenzhen Court of International Arbitration, which decided that cryptocurrencies must be legally protected “by law due to its property nature and economic value.

>> IBM Shipping Blockchain Grows with Two More Carriers on Board

The Shenzhen Court decided that Bitcoin and other crypto assets should be legally protected by China’s Contract Law, even if crypto is considered illegal tender in the country: “Bitcoin has the nature of a property, which can be owned and controlled by parties, and is able to provide economic values and benefits.

This is solid news. I dare say it is something like a repressed minority gaining rights. Perhaps that is a bit much as a comparison, but there is some truth to it. Cryptocurrencies are a minority of financial assets. They’re growing. And even though they are illegal tender in China, they are still being given rights.

Cryptocurrencies as Currency

Despite China’s crackdown, cryptocurrencies are being given more than rights in the country—they’re being given use cases. For example:

  • September 2018 saw the start of the Ethereum Hotel. This opened in the National Scenic Area of Four Girls Mountain, and it accepts Ether as payment.
  • On October 1, Beijing Sci-Tech Report (BSTR)—an established technology news source—announced it would accept Bitcoin as a payment method. Starting in February 2019, its subscriptions may be paid for with BTC. This was done “to encourage the utilization of crypto in a real-world setting for practical actions.”

This all happened thanks to the two digital assets, Bitcoin and Ethereum, being recognized as properties under local laws in China.

Granted, it’s not all rainbows and sunshine. Trading Bitcoin and other cryptocurrencies remains strictly banned. Yes, merchants are technically allowed to accept cryptocurrencies—but trading, crypto events, ICOs, and any form of OTC are still very much prohibited and enforced with jail time.

This could be a significant problem even for non-Chinese traders: Buying into an unregulated ICO is actually one of the biggest mistakes investors make.

>> This UK Financial Regulator has a Problem with Facebook’s Libra Coin

Being Cautious

ICOs are strictly forbidden in China—no exceptions. But what about STOs (Security Token Offerings), the upcoming darling of the cryptosphere? These are also being watched with apprehension by China.

Pan Gongsheng, acting deputy governor of the People’s Bank of China, spoke at a financial forum in Beijing:

The STO business that has surfaced recently is still essentially an illegal financial activity in China. Virtual money has become an accomplice to all kinds of illegal and criminal activities.

Alas, we won’t be seeing STOs in China anytime soon—but they may be coming out of China. Why? Because, despite the caution, people and businesses in China are pressing for the legalization of cryptocurrencies. They understand cryptocurrencies are the future, and if China keeps strangling them, then they risk being left behind.

Featured image: DepositPhotos © Alexis84

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China's Cryptocurrency Rankings

China’s Cryptocurrency Rankings | EOS Comes Out on Top

EOS still maintains the top spot in China’s cryptocurrency rankings list. The superpower updated its list last week, proving that EOS is still the favorite. Bitcoin has climbed up three places and now sits in 12th position.

Considering Bitcoin is up 10% to press time and approaching the $9k mark, its a wonder why it hasn’t ranked higher on the list. Well here’s why:

China’s Cryptocurrency Rankings

The rankings list assesses three criteria: technology, application, and innovation.

The top five were as follows: EOS, TRON, ETHEREUM, STEEM, and ONTOLOGY.

Despite the original cryptocurrency Bitcoin being the leading coin by market cap, it only managed to place in 12th. It scored well for creativity but lacked in basic technology.

The rankings are funded by China’s Ministry for Industry and Information Technology and were released by the Center for Information and Industry Development.

Moving forward, the body plans to update the list once every two months instead of monthly.

Eos has held the top spot since June 2018, while Tron has managed to stay in second place since February 2019.

Crypto’s In Green

The entire cryptomarket is experiencing double-digit gains today. China’s cryptocurrency rankings favorite, EOS is up 17.67% and selling for $7.45 per coin.

As stated, Bitcoin is holding firm above $8k—it is currently selling for $8,863 and up 10.87%.

The original cryptocurrency has been on a continued bull run this month. May has seen it pack on whopping gains of 65%.

Will The Gains Continue?

Recently, Bitcoin enthusiast and crypto fund manager, Brian Kelly, spoke to CNBC’s Fast Money and predicted that Bitcoin price will continue to rise. One reason for this is the approaching “halvening” that will see Bitcoin mining rewards cut in half. The halvening won’t happen until 2020, but until then, miners are expected to hoard BTC and this increasing demand will see Bitcoin price rise as the supply becomes lessened.

>>Is Facebook Launching its GlobalCoin Cryptocurrency Next Year? BBC Says Yes

Of course, Bitcoin remains as volatile as ever. Only one day after the coin passed the $8k mark, it plunged 10% back to $7,200 USD. While it has indeed paired those losses once again, never become too comfortable in this market. Another major dip is easily around the corner, especially if Bitcoin has been on an extended bull run.

What do you think of China’s cryptocurrency rankings list? Is EOS your favorite?

Featured Image: Deposit Photos/ilolab

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