While the relationship between cryptocurrency and blockchain and most countries is complicated by default, the relationship that China has with both industries is particularly complex. China has not been particularly receptive to cryptocurrency as there is a ban in place for using or trading in cryptos. At the same time, they have been proactive in embracing blockchain technology, the technology that creates cryptocurrency with their president even advocating for more blockchain innovation in 2019. Even as they are gearing to launch their own national digital currency, their relationship with the outside crypto industry continues to evolve.
According to the news reports, Chinese bitcoin volume activity over LocalBitcoins has reached a two-year low which implies that Chinese citizens are trading in bitcoin at a lower rate than ever.
According to the figures report from Coin Dance, for the weekend of January 25, 2020, Chinese citizens traded a total of $648,000 across LocalBitcoins which is a significant drop from almost $6.4 million which is the typical weekly figure.
Following their president’s statements in support of blockchain development, some were quick to assume that this meant that China would be softening its stance towards cryptocurrency as a whole. However, the president went on to clarify that the support for blockchain did not mean support for cryptocurrency. It is also notable that China has a very booming crypto mining industry which is ironic considering the ban on cryptocurrency itself though they have been crackdowns in several regions and many think the government is pushing back against mining altogether.
It is unknown how China’s interactions with the outside crypto community will change when their national cryptocurrency finally launches later this year. There are reports that China is trying to create an in-house system that will not be reliant on the outside crypto community in any way. However, Chinese citizens have continued to find ways to trade in cryptocurrency despite the ban such as the use of virtual private networks and proxies.