Most of the past month has been difficult for cryptocurrency traders. The market has been in a prolonged decline, and the price of Bitcoin on crypto exchanges has already reached the $7,500 mark. Everything presaged a harsh crypto winter. Suddenly, the clouds were dispersed by the head of the People’s Republic of China, Xi Jinping.
According to him, China should look at blockchain as an important breakthrough for independent innovations in the field of technologies. Therefore, the government needs to specify the main directions of development, increase investment and focus on key core technologies, as well as accelerate the development of blockchain and industrial innovations.
That was it. Not a word about Bitcoin (or other cryptocurrencies for that matter). But the market was just waiting for positive new like this. BTC price surged by 40% to $10,500, the biggest increase in a single day since 2011.
Of course, this did not last too long; at the press-time, Bitcoin is trading at the level of $ 9,335. But optimism in the crypto market has increased.
Following Xi Jinping’s comments, the industry association proposed adding a new holiday called China Blockchain Day to the list of annual celebrations in the country. The organization proposes the date when Xi Jinping comments were made – October 24th.
Just came across an industry association’s proposal to celebrate every October 24th as China Blockchain Day 🙂 pic.twitter.com/Rjs1Y7PcGu
— Matthew Graham (@mg0314a) November 5, 2019
Why does China need blockchain? As NewsLogical wrote China is preparing a draft of its own cryptocurrency called the digital Renminbi.
Experts are already openly saying that the Chinese are likely to be among the first to finish this project. This helps the country to discard the SWIFT payment system. Thus, China solves this strategic problem, because whoever controls the international exchange system also controls international trade.
Concurrently with Xi Jinping’s comments, the Chinese authorities adopted a new law to regulate the crypto sphere. It will enter into force on January 1, 2020. Although there is still a ban on cryptocurrency trading in China,the new law is seen as a step towards the launch of the national digital yuan, which is expected in November this year.
In turn, the law recognizes three types of encryption standards: core, common, and commercial, and it gives authorities control over them. The government will also encourage and support scientific and technical research in the field of encryption and protect the intellectual property of cryptography.
But nevertheless, the law is to a greater extent declaring general provisions and directions. It’s necessary to wait for additional actions to understand the depth of regulation.
China supports blockchain as a whole, but not Bitcoin in particular. Beijing wants to become a pioneer in the digitization of the national currency.
However, the ultimate goal of the transition to blockchain is for the greater extent of tracking of financial flows in the country. None of this is positive for Bitcoin or any other cryptocurrency, nor does it not fit into the value system of Bitcoin, which was conceived as an instrument of freedom from governments and central banks.