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The blockchain industry is feeling the impact of China’s latest round of restrictions on Bitcoin and blockchain digital asset use. While the most noticeable effect so far was a drop in asset prices, it could take a while for further effects to ripple across the industry.
The latest “Chinese Bitcoin ban” consisted of a statement from the People’s Bank of China, followed by supportive edicts from several other government departments, plus financial and technology industry representatives.
The “mining” industry, which was already substantially banned in China before this month, has been further curtailed as authorities seek to remove information and training materials related to mining operations.
Chinese ecommerce giant Alibaba published an announcement on September 27 that it would block sales of “blockchain miners” and related accessories, and close down those categories. The company said it would also block any “hardware and software used to obtain virtual currencies,” as well as “tutorials, strategies, and software for obtaining virtual currencies such as tutorials on mining.”
Twitter user @NP_tokumei has been compiling lists of digital asset exchanges and blockchain information sites that have recently been blocked in China, based on data from the tracking site GreatFire.org.
While the list is extensive, it includes well-known market trackers like CoinMarketCap and CoinGecko. Most were already blocked by the end of June 2021, but some notable recent additions are Coinbase, UpBit, and Bittrex.
After a major blockage in June when more than a couple dozens of BTC sites were blocked, 🇨🇳’s GFW just revised it blocklist to block more major exchanges, including @coinbase, @upbitglobal, @BittrexExchange, and @LoexGlobal
cc @GreatFireChina @CNBC @business @TheStreet#KeepItOn https://t.co/dSDHMOb8e2 pic.twitter.com/oJ6x71fJvR
— 𝓟𝓱𝓸𝓷𝓰 (@NP_tokumei) September 27, 2021
The sites more recently blocked in China are a mixed bag, with several more mainstream digital asset news sites remaining unblocked, or unconfirmed. However, the government appears to be prioritizing sites that would permit digital asset trading, or market information.
Last week’s announcements promised that anyone trading from PRC soil via a VPN connection would also be engaging in illegal activity. Actual statistics and effects of this are impossible to monitor with public information. Many traders will likely continue to trade this way, but it will deter some from entering the market.
What about BSV in China?
Lise Li, Head of the BSV China Hub, said she remained confident that the BSV ecosystem could continue to grow in China, despite a few setbacks.
“The BSV ecosystem has been growing in China in the past two years. More innovative applications and products have emerged, and many engineers have begun to learn to build on the BSV blockchain. We always hope that people can see the real utility value of blockchain technology, the value of how blockchain can improve social and commercial efficiency,” Li told CoinGeek.
As with many things BSV, it could be a longer game that involves proving the blockchain’s worth in other, non-speculative, areas.
“Although China’s latest policy will lead to the loss of many excellent entrepreneurs and developers in this industry, it is very important to put a new field back on track. The government does not want a leading technology to be destroyed by market bubbles and speculation. I believe that blockchain technology has enough vitality. In the long term, public chains such as BSV blockchain, which take distributed ledger technology and enterprise application as the development direction, will continue to attract more high-end talents in China.”
A reminder that China remains important
It’s no secret that much of the digital asset industry’s wealth over the years has resulted from Chinese interest and activity—mainly trading and mining. Despite ever-tightening restrictions over the years, exchanges like OKEx and Huobi have maintained a presence in mainland China and there is a huge OTC trading market.
Those exchanges will likely reduce their operations further over the coming months. However there has not been the “bank run” on exchanges that some feared. Prices dropped as traders sold off popular assets like BTC and ETH for “stablecoins” USDT and USDC, and then attempted to cash out of those assets. But the new, stricter guidelines have not completely crashed those markets.
As is usually the case, the new guidelines are not explicit regarding what companies can and can’t do. And in keeping with past similar events, Chinese companies will likely adapt and test the boundaries where they can—digital assets remain far too profitable to walk away completely.
The BSV industry in China will likely face some changes, particularly if it’s difficult for project developers to actually trade and use the BSV asset itself. However, BSV’s focus on compliance, responsibility and education may ultimately be a benefit. Assisting authorities in understanding the difference between the BSV ecosystem and other blockchain projects with little utility other than “number go up” trading could prove its real-world value.
China remains home to a large pool of development talent, as well as general interest in blockchain technology. This has been one of BSV’s greatest strengths so far, and it can continue to be.
Watch: CoinGeek Zurich panel, BSV Blockchain & China
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