Donald Trump's return to the White House could have a significant impact on the global crypto-political stage. According to Xiao Feng, chairman of HashKey Group, this event might prompt China to reconsider its hardline stance on cryptocurrencies within the next two years.
China's Stance on Cryptocurrencies
China is known for its strict stance on cryptocurrencies. Since 2017, the government has cracked down on crypto trading, ICOs, mining, and other crypto activities, citing them as threats to financial stability and sources of criminal activity. In 2021, all cryptocurrency transactions were declared illegal, and mining operations were shut down, forcing many companies to leave the country.
History and Current State of China's Crypto Market
China's crypto market experienced rapid growth in its early years. By 2011, China became one of the most active markets, which led to a quick rise in Bitcoin's popularity. However, in 2017, China began its crackdown on cryptocurrencies by banning ICOs and declaring all crypto transactions illegal. This led to a 'mining exodus' as miners relocated to more lenient countries. Nonetheless, an underground crypto economy still exists in China despite the bans.
Potential Changes in China's Crypto Policy
According to HashKey Group's Xiao Feng, China may reconsider its crypto policy influenced by international events such as Russia's SWIFT removal in 2022, highlighting the vulnerability of countries relying on centralized financial systems. Xiao suggests that decentralized finance might be a solution for China, proposing stablecoins as the most likely path for Beijing. HashKey research indicates demand for digital payment solutions among Chinese merchants.
The impact of international events and financial independence concerns might prompt China to reconsider its hardline stance on cryptocurrencies. Potential changes could happen sooner than previously expected, opening new prospects for the cryptocurrency market in the region.
