According to the Executive Chairman of Blockchain Research Institute, the Chinese are considering the possibility of converting their national currency, the Renminbi (RMB) into a state backed cryptocurrency.
In an interview with Bloomberg on April 17th, Donald Tapscott said that RMB will certainly be converted in to a cryptocurrency. He informed that he recently held a meeting with the Chinese Communist Party Vice Chairman. The Vice Chairman passed on the views of the Chinese President, Xi Jinping, who believes blockchain will play one of the most important roles in the country’s future.
This comes at a time when the Chinese authorities are clamping down hard on cryptocurrencies and even blockchain. Yet, according to Donald, this will actually have a positive effect on the Chinese currency conversion into crypto. With one of the largest crypto market in the world, the conversion of RMB in the crypto digital form will give locals a cryptocurrency that will be accepted by every individual and merchant, making it the most practical of all in the country.
Speaking on the crypto exchange and possible mining ban, he said, “It’s not really necessary to do that [the ban on exchanges and crypto mining] because in 20 years we are not going to be using bitcoin in China. Chinese people will use the RMB, only the RMB will become a cryptocurrency. The central bank of China will turn it into a digital currency”
Donald also voiced his opinion that although crypto exchanges are banned currently, there will come a time when decentralized exchanges will rise again. As and when RMB becomes a cryptocurrency, the most transparent and efficient way to trade would be through decentralized exchanges. This will also see the rise of crypto exchanges that will deal in digitized securities.
Tightening Noose on Cryptocurrency
Chinese authorities have banned crypto exchanges and ICOs in the past. The reason has been cited as an extreme speculative market where people’s assets are at extremely high risk. The next step in the process has been a consideration on the ban on crypto mining. The National Development and Reform Commission has included this sector in its list of industries and operations that it says should be stopped because “[Crypto mining] lacked safe production conditions, seriously wasted resources, polluted the environment,”
The ban would seriously hamper global mining operations since the Chinese market has a significant role play. Bitmain, the largest Bitcoin mining firm in the world, has 11 different mining farms in China. The heavy investment in the country is due to its cheap electrical power that leads to profit in a very energy intensive industry.
The Chinese authorities have been bringing in new laws to regulate the blockchain industry. In January, it introduced a new anti-anonymity regulation, requiring all blockchain companies to register with the Cyberspace Administration of China.
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