How Is the Relationship Between China and Cryptocurrencies Going?

China is one of those countries that is having a relationship full of love and hate with cryptocurrencies. During the recent years, the approach of this country toward cryptocurrencies has not been quite clear. There has always been contradicting news regarding the acceptance of cryptocurrencies by the government of this country and it is obvious that given the large number of this country’s population, the possibility of this nation entering the world of cryptocurrencies is really high. A country with an eager population to implement cryptocurrencies and having the possibility for launching needed infrastructures for developing Blockchain and its related belongings, does not express a clear approach regarding cryptocurrencies. Why? What is the reason? Where does the relationship between China and the crypto world lead to?

The Regulations Related to Cryptocurrencies in China

The famous cryptocurrency, Bitcoin, is recognized in China and there is no prohibition regarding implementing that tool legally. This cryptocurrency has been legalized since 2013. Yet, the use of Bitcoin and other cryptocurrencies as a currency is not considered legal. After the year 2017, the legal restrictions regarding the use of cryptocurrencies in China have become tougher in a way that the activities of ICOs and initial offering of cryptocurrencies have been completely prohibited by the law. The pretext for this increase in prohibition and restrictions is the increase in the possibility of scams and financial dangers. The prohibitions and restrictions that were considered for the initial offering of cryptocurrencies and exchanges made it possible for the transfer of many Chinese exchanges to other countries like Japan and Singapore.

The Use of Cryptocurrencies in China

Given all the legislations against cryptocurrencies in China, the status of their use is indicative that these regulations are not effective. The truth is that a large proportion of the Chinese people is active in things like mining cryptocurrencies, in their initial offering, and financial trades in this field. If somebody wants to buy cryptocurrencies, he or she will be faced with the least bit of difficulty. In fact, behind all legal restrictions that the government of this country has set, transactions, trades, and all the matters related to cryptocurrencies are going on.

The Effects of Legal Restrictions on Cryptocurrencies in China

The government of China believes that cryptocurrencies are a fertile ground for the formation of various crimes and scams, and also their mining requires a lot of energy which increases the energy consumption and is dangerous to the environment. This has hindered the growth and development of new technologies in a country that has a lot of capacity for developing cryptocurrencies. Many active Chinese exchanges and companies that have been growing in this field of Blockchain technology and cryptocurrencies, have been faced to leave the country due to state regulations. But the status of these companies abroad is evaluated as suitable and reminds us of the saying what doesn’t kill you makes you stronger. We should wait and see whether the power of Chinese entrepreneurs in the field of cryptocurrencies and development of these tools and new technologies in the world will also change the approaches and policies of the government of China or not?
 

Coins International Journal