Donald Trump has recently started focusing on cryptocurrencies, declaring his ambition to become the “crypto president” and highlighting digital assets as a significant geopolitical issue.
In an interview with Bloomberg on July 16, Trump explained his new interest in crypto. He said, “If we don’t take action, China will take over this technology—or someone else, but most likely China.” Trump mentioned how his recent experience with his “Mugshot” NFT Collection made him see the potential of cryptocurrencies, noting, “80% of the money from the NFT sale was paid in crypto. It was amazing.”
Trump added, “We have a strong base with crypto. It’s still in its early stages. I don’t want to be responsible for letting another country dominate this field.”
His comments have sparked questions about China’s current stance on cryptocurrencies and whether it might try to re-enter the crypto market.
China’s Crypto Past and Present
China was once a major player in the cryptocurrency world. Many leading crypto exchanges, like Binance, were based there, and about 75% of Bitcoin mining happened on the Chinese mainland. However, in 2021, China banned crypto trading and mining, leading to a significant drop in its crypto activities.
Recent events have raised speculation that China might be reconsidering its stance on crypto. In October, Chainalysis noted that China might be testing crypto initiatives in Hong Kong. In April 2024, the Chinese government approved several Bitcoin exchange–traded funds (ETFs) in Hong Kong, leading some to believe that China is positioning Hong Kong as a crypto hub while keeping a ban on the mainland.
China’s Crypto Ban: A Misstep?
Many experts believe China’s 2021 ban on crypto was a mistake. Daniel Lacalle, Chief Economist at Tressis, said, “China made a huge error by banning crypto trading and mining, especially as they seek to reduce reliance on the dollar. The ban hurt the yuan and missed out on a key technology.”
Emiliano Pagnotta, an Associate Professor at Singapore Management University, called the ban a “strategic blunder,” noting that China lost a significant share of the mining industry to the US.
Pagnotta explained that controlling the majority of Bitcoin mining power would have given China a lot of influence over the network’s security. The ban only caused a temporary decrease in mining activity, which was less damaging than losing control over the network.
China’s Current Approach
Yikai Wang, an Economics Professor at the University of Essex, believes China does not regret the 2021 ban. He explained that China’s strict control over capital flows motivated the ban. However, Hong Kong, while under Chinese control, has different economic policies and could become a natural home for crypto.
Patrick Pan, CEO of OSL, a crypto exchange in Hong Kong, noted that the digital asset ETF market there has grown significantly since its launch in April 2024. He added that mainland China continues to enforce a strict stance on crypto trading.
Despite this, Pan observed that China recognizes the value of blockchain technology, as seen in its development of the digital yuan. This indicates that while China remains cautious about crypto trading, it is still investing in blockchain for its long-term benefits.
Disclaimer: Remember that nothing in this article and everything under the responsibility of Web30 News should be interpreted as financial advice. The information provided is for entertainment and educational purposes only. Investing in cryptocurrency involves inherent risks and potential investors should be aware that capital is at risk and returns are never guaranteed. It is imperative that you conduct thorough research and consult with a qualified financial advisor before making any investment decision.
