The Chinese regime overturned a two-year ban on cryptocurrencies and now wants to dominate blockchain technology to improve the tracking of its citizens.
Professor Chen Chun of Zhejiang University successfully explained to Chinese leader Xi Jinping and the Chinese Communist Party’s Political Bureau on October 24 that “the application of blockchain technology plays an important role in new technological innovation and industrial transformation”, according to Xinhua state media.
The following day, Xi told Politburo members that China must ” seize the opportunity ” for blockchain to play “an important role in the next round of technological transformations in areas such as business financing, mass transit, and downsizing. of poverty.
Xi ordered China to accelerate the issuance of its digital currency to beat the launch of the US-based Libra Coin, in order to open a new competitive front in its growing “Tech War” rivalry with the US, according to Enodo. Economics.
In 2017, China officially ordered the rapidly growing number of local exchanges trading cryptocurrencies to close and ban new initial coin offerings in an effort to prevent risky investment bubbles.
But digital banking sources contacted by The Epoch Times for this article say Chinese authorities wanted to prevent Bitcoin and other digital currencies from helping escape to the mainland and Hong Kong capital.
The international press reported that China’s capital flight fell from $ 675 billion in 2016 to $ 380 billion in 2017, before falling to $ 22 billion last year.
But capital flight accelerated to $ 139.2 billion in the first half of 2019.
The 2017 Development and Reform Commission final order banning cryptocurrency trading did not ban the creation of new digital currency for existing cryptocurrencies, a practice known as mining.
China continued to host many of the world’s largest cryptocurrency mining farms that remained hyper-competitive due to access to cheap electricity in the coal-rich regions of Xinjiang and Inner Mongolia.
The Chinese Communist Party’s reversal of leadership over cryptocurrencies has been attributed to a series of briefings by Chen Chun, a professor at Zhejiang University and President of Hangzhou Qulian Technology Co. who owns about half of the shares in a solutions company. blockchain.
Chun has tried to alleviate the misinformation from central authorities that Bitcoin and the greatest attribute of other digital currencies is offering privacy and untraceable qualities similar to that of a “Swiss bank account”.
Despite Bitcoin’s popular reputation as anonymous, every single transaction is always tied to a fixed “wallet” address, providing governments with a near-perfect means of keeping track of individual and commercial finance activities.
The policy shift kicked off a huge speculative spike in blockchain-related Chinese tech stocks that peaked with a keynote speech on November 5 by Galaxy Digital CEO Mike Novogratz at the Reuters Global Investment Outlook 2020 Summit in New York. . Novogratz stated that Xi “just encrypted the cryptography and blockchain”.
China’s stock market frenzy cooled on November 6 after People’s Daily warned of the need to avoid speculative behavior in the blockchain industry.
Hangzhou Qulian’s tech later that day issued a securities deposit that investing in cryptocurrency will have no effect on “short-term earnings as the blockchain is still in its early stages.”