China Emerges as Unexpected Hub for Blockchain and Cryptocurrency Developments
Around a year or two ago this time, it would’ve been laughable to suggest that China is going to become a global center for fintech innovation. Yet here we are today. China just passed a law regarding data encryption and cryptography that is set to be implemented in early 2020. Other than that Reuters reports that a division of the government is looking to use blockchain and AI for cross border finance, October 27, 2019.
A Thematic Shift in Blockchain
In a surprising turn of events, China, a country that has been criticized for blatant censorship and suppression of human rights, is cultivating regulation for individual privacy, and using transparent technology in an attempt to liberalize their capital markets.
As Facebook’s Libra comes under fire from American regulators, China is advancing the rollout of its state-backed FinTech projects. Their sovereign digital currency is expected in the near future, although the state claims they will not rush the launch.
Lu Lei, a high ranking official from the State Administration of Foreign Exchange (SAFE), claims that China’s move is coming at an opportune time, as the world gauges Libra with disparaging eyes. A combination of blockchain and AI will allow for a transparent base ledger while making processing much more efficient. Given the speed of innovation in the financial sector, and the lack of oversight from a risk management perspective, Lei believes a system that can effectively weigh risks will serve a larger purpose.
Not Just the Government – Retail Too
According to a report by The Block, Baidu search volumes for terms such as “blockchain” and “bitcoin” in China saw an overnight swing of over 1300 percent. President Xi Jinping indicated his desire for China to become blockchain leaders by committing to the implementation of the technology.
Some people even think this caused a sudden 40 percent gain in bitcoin, as though Chinese people heard President Xi say “blockchain” and immediately transferred fiat to a crypto exchange.
The retail sentiment is arguably more important than sovereign or corporate outlooks. Bitcoin is meant to empower the people, and growing awareness for this will only bring people closer and closer to the bigger picture. At the end of the day, most cryptocurrencies are retail products.