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The Government Doesn’t Understand Anything About Bitcoin

Throughout the previous month, merchants and traders in China have criticized the Chinese authorities’s sudden crackdown on native cryptocurrency exchanges and buying and selling actions.

What occurred?

In September, the Chinese Authorities, People’s Bank of China (PBoC), and native monetary authorities imposed a nationwide ban on cryptocurrency buying and selling platforms, shutting down among the international cryptocurrency change market’s largest buying and selling platforms together with OKCoin, Huobi, and BTCC.

The motive behind the Chinese authorities’s closure of native cryptocurrency exchanges has not been clarified, however a number of researchers for the PBoC have acknowledged that the nation’s central financial institution considers Bitcoin and different cryptocurrencies as threats to the Chinese financial system.

Supervision technique?

Last month, in an interview with the PBoC’s state-owned finance information publication Sina, Huang Zhen, a researcher at Central University of Finance and Economics and PBoC, stated:

“Cryptocurrencies and other virtual currencies attempt to challenge the sovereign state’s right to issue currency, requiring the nationalization of currency issuance. China has a clear understanding of digital forms of money, and is actively engaging in relevant work. The central bank has set up a research group and a digital money research institute to explore the digitization of sovereign money. After this round of virtual money markets supervision, we expect under the auspices of the Chinese central bank to launch our own sovereign digital currency as soon as possible to help maintain China’s leadership in the development of global digital finance.”

Logically, if the Chinese authorities intends to go forward with the technique of issuing a state-controlled digital forex and considers Bitcoin as a risk to its monetary system, the motive behind the federal government in proscribing buying and selling actions round Bitcoin and cryptocurrencies is sort of clear.

Or no technique in any respect?

But, these days, the Chinese authorities has expressed its optimism in the direction of releasing a licensing program for cryptocurrency exchanges to stop cryptocurrency transactions flowing into underground economies and black markets.

Such a sudden shift in stance in the direction of Bitcoin and the cryptocurrency market has provoked consternation amongst merchants and traders throughout the Chinese cryptocurrency neighborhood.

Zhang Yanhua, a serious Bitcoin investor and a founding father of an funding fund targeted in cryptocurrencies, stated:

“The authorities do not perceive something about Bitcoin!”

Sun Minjie, one other investor who has lately bought a considerable amount of Bitcoin as an important a part of its portfolio, informed AFP that the Chinese cryptocurrency neighborhood and himself don’t anticipate a lot from the Chinese authorities any longer:

“I anticipate nothing from the federal government… however the destiny of Bitcoin doesn’t rely upon the Chinese authorities.”

David Yermack, finance professor at New York University, shared an identical sentiment to most traders and merchants in China, emphasizing that the Chinese authorities does think about Bitcoin as a risk to its monetary system to a sure extent. But, such concern in the direction of Bitcoin and its potential within the international finance sector needs to be thought of as a constructive indicator for long-term development. Yermack stated:

“They didn’t ban Bitcoin, but banned exchanges from trading for speculative purposes. It has a lot to do with problems in the Chinese financial system, that they’re worried about this as a competitive threat in some way.”

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The Government Doesn’t Understand Anything About Bitcoin

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