On September 30, 2017, a Shanghai-based bitcoin exchange BTCC announced that it will shut down its China-facing operations. This announcement by the oldest cryptocurrency exchange in the world's largest market confirmed that China may be on the verge of a broader campaign to discourage cryptocurrency activity in the domestic market – extending a permanent ban on crypto-exchanges.
3 months down the road, we see other Asian countries following suit as well. Recently, South Korea has announced taking similar measures. As reported by the local news outlets, the South Korean government has developed a system that will start banning the use of anonymous accounts in cryptocurrency transactions starting from January 20.
On the other hand, the rest of the world is rapidly adopting cryptocurrency, taking the prices of Bitcoin, Ripple, and others to an all-time high. Some leading financial institutions like Royal Bank of Canada (RBC) are predicting that cryptocurrency and blockchain have the potential of becoming a $10 trillion ecosystem.
In these contrasting scenarios, when we ask the questions like “will China/Korea lift the ban from crypto-trading?” the general assessment is unclear, but some analysts and investors are very hopeful.
Bobby Lee, who’s the CEO and co-founder of BTCC, which closed its China-facing operations in September is very hopeful. According to him, it's only a matter of time before China lifts its ban on cryptocurrency exchanges.
"In this world, nothing is ever permanent. One day I think it's possible they'll lift the ban, so called, and they might reinstitute it and license it" Lee told CNBC. However, he is not sure how much time this could take.
"Frankly speaking, I don't know what kind of time frame that is, whether it's a few months, a few years or even a few decades, so it's hard to tell. However, one thing is sure, the more the governments and the regulators tried to put a squeeze on bitcoin, the more we see that bitcoin is actually resilient” says Bobby Lee.
The entrepreneur who was forced out of Chinese bitcoin market is now focusing on developing an international trading platform and cryptocurrency wallet named Mobi. He’s aiming at developing a wallet that could support multiple digital currencies, and not just one particular exchange.
Why has China Banned Bitcoin Trading?
The official version of the policy is not much clearer, except that the president of Chinese central bank declared cryptocurrency a threat to the country’s economic and financial system. However, there are many unofficial versions and conspiracy theories.
Since cryptocurrency is a decentralized financial instrument with no role of the central banks, it does not suit a purely controlled economy like China. Another risk that many central banks and regulators share is of fraud and money laundering since there is no trace of the chain.
The last but not the least argument is that China is preparing its own version of cryptocurrency, and will introduce it as a controlled and fully-regulated alternative of the Bitcoin. Only time will tell which one of the listed theories is true.