Gifto Official
Oct 27, 2018 · 2 min read

“Countries like China have taken a very strong position against Cryptocurrency. However they have a very strong belief that blockchain technology can transform the world around us and they are looking to implement it in ways that will be extremely productive to their society.”

Thanks for this piece. I enjoyed the read. Here are some thoughts of my own:

I think it’s also important to point out that Chinese regulators are wary of crypto until they can figure out a way to place capital controls on it, in the early days it was a common way to move RMB out of the country. Also, with mining as big as it is in China, and the amount of energy mining requires, it puts huge pressure on the government because energy and ‘scarce resources’ are not being used for its “laobaixing” common people, but rather for profit of a small few. Last winter, there were issues with schools in the countryside not having access to heat and electricity, forcing kids to have class outside because it was warmer than inside the buildings while energy resources were being used to mine crypto. Just doesn’t reflect communist values and threatens systemic stability.

I agree with your point about the numerous scams that hurt the regular retail investors as well. Chinese people have been hurt over and over again by ‘financial services’ and being promised wealth and security but actually losing their entire savings. This happened in 2016 with the P2P lending, and now again with ICOs. People aren’t equipped with proper information to make investment and unfortunately they are the most risk adverse too. Doesn’t make for a good combo in ensuring social security. Understanding these deep drivers of the Chinese economy are important to understanding how regulation will be formed.

While many Chinese policies tout self regulation in their requirements, the reality is that self-regulation will not suffice when things like insider trading and securities laws do not apply to the industry. In China, the government is weighing down heavily on what they refer to non-bank financial services, or tech companies that act as banks (and often control more money than banks) so until they figure out how to regulate this segment, I can’t see crypto policies opening up anytime soon.

Sincerely,

Gifto Policy Team

    Gifto Official

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