Thread by @sallywang666

For those of you who’s wondering what this #China FUD is all about and what it leads to. First time coauthored with @jon_ftx talking about what our thoughts are and what messages China is delivering to the market —-

Have a read! : )

blog.ftx.com/blog/wang_chee…

The “China Monetary Policy Implementation Report for Q1 2021” released by the PBOC in May 2021 set the tone for the next stage of the country’s monetary policy, clarifying that “a prudent monetary policy should be flexible, targeted and appropriate,

put the service of the real economy in a more prominent position, cherish the normal monetary policy space, and handle the relationship between economic recovery and risk prevention.”

At its speculative height, Chinese retail investors were pouring money into “hot assets” some of which were lower quality altcoins (e.g. LoserCoin, QiongB etc). Despite government warnings this hype spiralled and became a concern for officials.

After all, the PBOC’s goal is to promote steady and measured growth to better serve the real economy and create a “virtuous cycle and healthy development of the economy and finance”.

The relevant depts of PBOC pointed out that cryptocurrency trading activities disrupt the “normal economic and financial order, breed the risks of illegal cross-border transfer of assets,

money laundering and other illegal and criminal activities, and seriously infringe the safety of the people’s property”.

Compared with the previous ban issued in 2017, the new rules are more heavy handed and have greatly expanded the scope of prohibited services.

The 2017 policy focussed on ICOs, this year’s policy cuts deeper, focusing on controlling excessive energy consumption (in this case, in mining) and OTC trading. More recently, it’s becoming clear any crypto related advertising is also prohibited.

Cryptocurrencies, especially Bitcoin, are a challenge for Beijing as the PBOC cannot track the flow of funds. The PBOC has always been extremely concerned at the destabilizing risk of capital outflows.

China is going “all in” on its own crypto but of course its version of digital currency/DCEP will be controlled by its central bank. It is expected to provide the Chinese government with a large number of new tools to monitor its economy and people.

This fits with China’s growing role in the global economy and initiatives like Belt & Road. By design, DCEP will negate one of the major ‘flaws’ of Bitcoin: anonymity for users.

China’s 14th Five-Year Plan (2021-2025) crossed over into 2021 (the 100th anniversary of CCP) and it claims to be the great development and prosperity of the digital economy.

It will also be a five-year period of accelerated blockchain innovation, ecosystem construction, widespread grounding of (applications), and implementation of regulatory practices.

Blockchain plays a key role in the country’s digital economy under President Xi Jinping’s Vision 2035 strategy in three key directions: technological innovation, industry application and regulatory system.

According to the current trend, China is separating the concept of cryptocurrency from blockchain and advocating tokenless blockchains. It aims to turn DCEP/digital yuan into a truly global currency.

Under the stricter restrictions of the Chinese government, major Chinese exchanges like Huobi and Okex are seeing declining volumes. Make no mistake the Chinese crypto landscape has changed profoundly in a very short period of time.

You can now read this article on Chinese crypto media TechFlow : ) (thanks TechFlow for the translation)
techflow520.com/news/209