Circle CEO Jeremy Allaire says China appears to be softening its stance towards Bitcoin and other cryptocurrencies.
Speaking to CNBC, Allaire highlighted several events and factors that show this shift in attitude from the notoriously anti-crypto country.
Recent crypto-friendly happenings
Allaire pointed out that the Hangzhou Internet Court recently ruled that Bitcoin is a commodity and can be be used for transferring value although it does “not have the legality of an official currency.”
The Circle CEO then cited that the Bank of China, which is owned by the state, recently released an infographic about Bitcoin on its website, and this infographic was pro-cryptocurrency in nature.
Another sign of the country’s possible softening stance is that there is still a large amount of participation in the cryptocurrency market by Chinese citizens, although they have to use exchanges that are located offshore.
Allaire also brought up the fact that Huobi, a cryptocurrency exchange based in Singapore but founded in China, created a Communist Party committee at a subsidiary based in Beijing back in November 2018.
At the launch ceremony for the committee, Huobi founder and CEO Li Lin called the committee’s creation a “milestone” for the company.
These instances show that the Chinese government may slowly be changing its tune when it comes to virtual currencies argues Allaire.
“We have been seeing, from my vantage point, a softening in the Chinese stance towards crypto,” Allaire said.
Trade war and competition
There are several factors that could possibly be contributing to the Chinese government’s change in heart towards the top cryptocurrency.
The first is the ongoing trade war between China and the United States, which was started when U.S. President Trump ordered the imposition of tariffs on many Chinese goods.
Economic uncertainty is always a catalyst for people to put their money into assets that are seen as more stable, and Bitcoin has been used a store of value for people worried about inflation impacting their fiat currency.
The Chinese yuan just saw a sharp weakening in its value, a move that the financial sector says is retaliation from the Chinese government.
In response to the weakened yuan, the U.S. government has designated China as a currency manipulator.
U.S. Treasury Designates China as a Currency Manipulator: https://t.co/Ndu7vtF3wO
— Treasury Department (@USTreasury) August 5, 2019
The creation of Facebook’s Libra may also be a factor for this shift in attitude.
Wang Xin, an executive with the People’s Bank of China, said the bank believes the Libra could pose a challenge to Chinese monetary policy and financial sovereignty.
“If the digital currency is closely associated with the U.S. dollar, it could create a scenario under which sovereign currencies would coexist with U.S. dollar-centric digital currencies. But there would be in essence one boss, that is the U.S. dollar and the United States,” said Wang.
“If so, it would bring a series of economic, financial, and even international political consequences,” he added.
If China does officially embrace Bitcoin and other cryptocurrencies, this would mark a substantial turnabout for the country’s government.
The Chinese government has been hostile to cryptocurrencies in recent years, as is evident by the ban on ICOs in 2017 and crackdowns on crypto mining.
However, cryptocurrency mining is still big in the country, racking up a full 60% of Bitcoin’s total computing power.
Despite a drop in Bitcoin price several weeks ago that saw BTC fall from just over US$13,000 to $9,345 in a week’s time, BTC has rebounded in August.
BTC started off the month at $9,991 but is currently trading at $11,823, an increase of 7.38% in the last 24 hours