China’s cryptocurrency ban is not what it seems
The People’s Bank doesn’t want a crypto-free country – it wants to own the market.
Don’t be surprised if China follows Russia’s lead in launching its own state-issued cryptocurrency by the end of the year. Don’t be surprised, either, if China’s own investors ignore it in favour of unregulated cryptocurrencies that they will continue to invest in despite China having apparently shut down the entire domestic industry in September.
There is plenty going on in the Digital Currency Research Institute at the People’s Bank of China (PBoC). When China announced a ban on initial coin offerings (a ban spearheaded by the PBoC but actually a joint statement between seven agencies) and then one week later banned the trading of bitcoin and other virtual currencies on all domestic exchanges, it was widely assumed that this was a temporary halt while China nuanced its position on what it is going to do about this unstoppable trend.
The PBoC is not stupid. It will not have been surprised to see that after an initial plunge in the value of virtual currencies following the bank’s announcement, their worth has soared right back to where it started; nor will they be blind to the fact that this clearly represents the same Chinese investors going back in, whether through Hong Kong virtual exchanges like TideBit, or perhaps through Japan, which officially authorized 11 cryptocurrency exchanges in September just as China banned them (South Korea launched its own ban later in the month).