China’s cryptocurrency and blockchain story continuously unfolds as the state releases more information on its stance.
Initial Chinese Offering
Despite the Chinese government banning cryptocurrency trading and investment on official news sites, domestic social media accounts and exchanges, China has invested over $3 billion in blockchain allocated funding over the past three months. The state was opposed to virtual currencies and cracked down on exchanges and Initial Coin Offerings alike last September, which had proved problematic for Chinese traders but ultimately preventing them from the lulls of the speculative movements that surrounded the market in the latter part of Q4.
Interest in cryptocurrency in China has seen a progressive fall over the past year, with a spike in curiosity in January when the cryptocurrency ban was at its height. It is evident that
Figure 1: Interest in Chinese Cryptocurrency Closely Tied with Crypto Ban and Interest Declining over Time
Data Source: Google Trends
these two topics are closely related and there has been a sense of FUD on the investment side as a result of the state attempts on regulation.
Figure 2: Timeline of Chinese Regulation on Cryptocurrency
Data Source: Crowdfund Insider
There has, however, been no discouragement from China in relation to venture capital in the backing of startups nor has there been a narrative by the state in adoption of blockchain technologies. It seems more likely that China is attempting to regulate this emerging industry at its earlier stages, a blockchain with Chinese characteristics.
It is evident that the Chinese state values cryptocurrency differently from that of the West that often champions price, market cap and supply as important metrics in market capitlisation. China’s blockchain public rankings put application and technology of blockchain higher in terms of indicative importance.
China ranks EOS above Ethereum and Bitcoin through CCID and CSTC, institutions that are backed by the Chinese government through funding. China does ranks Ethereum second, Bitcoin tenth with other dominant Asia based cryptocurrency NEO high up upon the ranks. It is evident that through analysis of those higher than Bitcoin in the rankings that technology and application are most important as in Komodo, Nebulas and Stellar referring to scalability and capacity. EOS ranks highest at 104.3 points for the technology segment.
National Standard for Blockchain
Banned ICOs and crypto exchanges were at the time justified by China Central Television (CCTV), the state owned Chinese broadcaster, berating start-up projects. This thought took a dramatic turn over the past year with a CCTV show that was inclusive of state officials stating, “Blockchain is the second era of the Internet. The value of blockchain is 10 times that of the Internet.”
Figure 3. The state-run CCTV broadcasts importance of blockchain
Data Source: CCTV
Blockchain technology had been added to China’s 13th five-year plan for development of information technology. There have also been news and rumors that have been suggestive that, by rejecting fundamental ideas that are related to blockchain technology such as free asset movement and non-government control of money, the Chinese central bank is creating its own centralized system for digital currency that could replace fiat. This would make for the largest ICO seen as of yet.
“To truly deploy the power of a blockchain without token incentives remains a near impossible task”
On the face of it, it may seem that China takes a technology first approach, focusing on blockchain development. To truly deploy the power of a blockchain without token incentives remains a near impossible task. It is likely that China is attempting to foster a legitimized and state-backed cryptocurrency platform that is domestically made and away from permissioned blockchains. There have been suggestions as of late with China continuing its blockchain journey through the creation of a new finance and trading platform with the assistance of its central bank (People’s Bank of China).
 Sacramento, M.2018. Chinese City Starts a $1.5 Billion Fund to Promote Public Blockchain Projects. https://www.ccn.com/chinese-city-starts-a-1-5-billion-fund-to-promote-public-blockchain-projects/
 《对话》 20180603 把脉区块链 | CCTV财经 https://www.youtube.com/watch?v=PeCTHcAQ_ho
 China’s 13th Five Year Plan for Information and Technology. http://www.gov.cn/zhengce/content/2016-12/27/content_5153411.htm
 Dai, S. 2017. China’s central bank is developing its own digital currency, even as it bans bitcoin and private cryptos. South China Morning Post. https://www.scmp.com/business/companies/article/2118468/chinas-central-bank-studying-its-own-digital-currency-even-it
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