The authorities in China have a stern stance against private cryptocurrencies. Ever since the Chinese government banned cryptocurrencies, they have been cracking down on any entity that fails to comply with their anti-crypto regulations.
The regulators have made it quite clear that China is only focused on using and implementing blockchain technology. Since they’re developing their own state-backed national currency, it is quite obvious that they wouldn’t be ok with handing over financial power to private companies.
However, the people of China are more inclined towards cryptocurrencies. Earlier when the President of China made some bullish comments about blockchain technology, the nation saw that as a regulatory boost for cryptocurrencies. The market was quick to respond with a healthy gain with Bitcoin jumping 42%. This goes to show that despite the complete ban of cryptocurrencies within China, the people still care about using crypto to replace fiat money.
Now, it looks like the blockchain-based companies within China have the same fondness. A recent report dubbed “Bluebook on Blockchain” formulated by five financial and technological authorities reveals that majority of blockchain firms in China have tried to start their own cryptocurrency project.
The authors of the report include the Chinese Academy of Social Sciences, the Payment and Clearing Association of China, the Beijing Blockchain Technology Application Association and Social Sciences Academic Press. The report states that there are around 28000 blockchain companies in China and only 4000 of them are focused completely on blockchain technology.
Around 25,000 blockchain companies in China supposedly have tried to create and issue their own tokens, while only 4,000 are fully focused on blockchain applications, Yedong Zhu, president of the government-backed nonprofit Beijing Blockchain Application Association, said in an interview with Chinese state media CCTV at the report’s launch.
Despite this, the Chinese government is still very strict about private crypto tokens. The report highlights that the advancement of technology has given rise to various new forms of cybercrime. In fact, the cyber fraud industry in China has reached a total of 110 billion Yuan in value and is the third-largest “black industry” in China. The report states that this is the primary reason why financial supervision is vital.
China had also seen numerous blockchain firms involved in various types of financial fraud via Initial Coin offerings (ICOs), until the government deemed ICOs illegal. Speaking on this matter, Zhu further mentioned that:
“We need to make sure the blockchain firms that illegally raise funds and commit financial frauds are not included in the government blockchain support programs.”
These revelations come at a time when China is pushing towards launching its own national currency. The nation is also experiencing a sudden blockchain hype after President Xi Jinping’s call to focus on blockchain development whilst calling out cryptocurrencies to be a “Ponzi”. The nation is now divided in two as the government wants to focus on blockchain while the blockchain companies are inclined towards cryptocurrencies.