There was much speculation that China’s snap decision to firstly ban ICOs, and then take a hard-line approach to Bitcoin exchanges, was a power play ahead of the 19th Communist Congress.
With that political flexing of the economic muscles out of the way, what is the new dawn for Bitcoin in the Socialist country?
Many are feeling there is a new wave of optimism, however, when it comes to Bitcoin, others think that it is a totally different ball game.
Cryptocurrencies are a special case
Gordon Chang, American columnist, blogger, television pundit, author and lawyer, has said that although the Congress was successful and there was optimism for the Socialist country, he does not sense liberalism on its way. Chang said:
“There has been optimism that after the Communist Party’s 19th National Congress there is going to be liberalization in many areas of the economy — that is possible. But cryptocurrencies are something of a special case.”
Chang is of the opinion that Bitcoin flies too much in the face of the controlling Chinese government and that unless there are massive liberal changes, the current regime will not stand for it.
“The Chinese have been concerned that citizens can use Bitcoin and other cryptocurrencies to expatriate money, and taking the capital controls and making a mockery of them, so there has been this clampdown on Bitcoin. I think it will continue,” Chang suggested ominously.
“I think the most fascinating thing are comments from the People’s Bank of China, about China developing its own sovereign digital currency, sort of as a replacement for Bitcoin. This is going to be fascinating to watch because the Chinese central bank is going to want to have control and the reason why these cryptos are so popular is because they take control away from the government and give it to the people, so this is going to a struggle.”
This indeed was the way in which Russia went about things as they banned access to Bitcoin exchanges, before announcing their own CryptoRuble.
Chang says that the prediction that the banning of Bitcoin was a power play for the Congress is maybe not entirely true. The current regime is looking to control more of the economy, as well as the markets.
“We have seen this so far, there has been the prohibition on ICOs and the closing of exchanges and everyone is thinking that this was in the run-up to the Congress. Under the current leadership, there has been an attempt to impose more control, not over only the economy but also the markets. So any sense of allowing Chinese citizens to export currency is just counter to what the government has been doing. I think what we will see is more of that trend after the Congress, but we will have to wait and find out – but I don’t think signs are good for liberalization in the coming months,” Chang concluded.