China’s position on cryptocurrency became even blurrier this week after a government official implied that Beijing is considering minting its own state-run digital currency.
PBOC Official Calls for State-Run Cryptocurrency
Yao Qian, the Director of the central bank-run Digital Currency Research Institute, laid out a clear vision for a state-run digital currency at a meeting hosted by the International Telecommunication Union. Yincai news agency reported that Yao pitched a state-issued cryptocurrency as a way to stabilize the yuan, which has undergone repeated devaluation since 2015. Yuan instability has been a primary catalyst for bitcoin adoption in China over the past two years.
“The value of cryptocurrencies such as bitcoin primarily comes from the market speculation. It will be a disaster to recoganize it as a real currency. And the lack of a value anchoring inherently determines that bitcoin can never be a real one,” Yao told the attendees.
In Yao’s view, bringing digital currency under the purview of government creates tangible value that promote stability.
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The People’s Bank of China (PBOC) launched the Digital Currency Research Institute back in June to explore the application of blockchain technology. Apprehensions about bitcoin and other cryptocurrencies has not deterred governments from exploring use cases for blockchain.
China Speculation at the Center of Bitcoin Rally
Bitcoin prices soared to new highs on Thursday, partly in response to speculation that China may ease its crackdown on cryptocurrency. The BTC/USD exchange rate broke above $5,400.00 on Thursday, bringing the total market cap well north of $90 billion.
Bitcoin spiked again on Friday, surpassing $5,500.00 for the first time.
China continues to be the epicenter of the bitcoin market. Between 60% and 70% of new tokens are mined there, mostly under the purview of Bitmain. Two Chinese brokers, OKcoin and BTC China, control roughly one-fifth of the global bitcoin market. Beijing’s decision to ban cryptocurrency last month triggered a 40% correction in the BTC token before recovering.