Is China Poised to Relax Its Crypto Ban?

so slightly. Now, just to set the scene a little bit, this is all related to broader signs and some speculation that the country is quote unquote reopening. In other words, that as China loosens the restrictions it had imposed to deal with the coronavirus pandemic, that this is having benefits in all different parts of the economy. Here with me today to discuss China's potentially softening stance on crypto is

Bloomberg Reports. Muya Shin we are. One of the interesting things to me about your reporting is that you go from you know, writing about defy or staked ef two big macroeconomic considerations like what's China doing with crypto? And that's what we're going to focus on in this episode before we dive into the very latest on what China has been thinking about or doing as it relates to Krypto, Why don't you kind of set the stage for our listeners as to why China has for so long been

such a key player in the crypto ecosystem. I think China, like many East Asian country has always been sort of the first one to embrace a lot of new technologies and blockchain crypto themselves, you know, included. And so I think since bigcoin is born not long after, there's a lot of excitement in the China community alone, and we're seeing more people in China jump into bitcoin mining. In fact, it got so exciting and China becomes sort of like

main market. That's behind the I see o booms in seventeen. I see it is initial coin offerings after Etherian got popular and people can launch all types of tokens only theory and and while launching sort of like raising funds through this token offering. So you had this I see a boom, as you say, in twenties seventeen, and then you had a couple of years of kind of like

intense growth, like what was happening. So what happened is that while the bull market was you know, made everyone so excited all that obvious, what came with I c O as we all known today that maybe nine nine of project has failed as a result that I think a lot of retail users in China lost a lot of money from that, and China realized that's kind of like a problem they need sort of like address that.

I think since in China have been sending all sorts of like discouraging messages around like being engaged in cryptocurrency, and that went you really, really really severe, I think in because one of the messages, you know, if I'm thinking back to it's like a weekend. When the pronouncement landed from China, there was this big focus on the concern that declining crypto prices and to your point, investors

losing money could lead to societal up people. Yes, I mean that has always been one biggest issue for Communist Party in China, as someone who is from China. So China did this crackdown, there was sort of an immediate reaction in crypto markets, particularly in in bit coin, down double digit percentages. As we've talked about extensively on this podcast with our colleagues, you know, David Pan and Uh Eyang.

There were reverberations for bitcoin miners who had to literally physically unplug all of their machines that were plugged in Oliver China. Ship those machines out of the country, end up in places like like Texas. You had a lot of kind of startup and engineering and entrepreneurial talent leave leave the mainland and go to the US, to the UK, to Europe in some cases to Hong Kong, and then you you kind of you know, you get into two. It's crypto winter. There's no signs for most of two

that any of that might reverse. People aren't necessarily moving back. But now it's and we're having a very different conversation. What exactly is going on right now? I think everything has to do this whole China reopening UM again after perhaps the most severe like restrict starns around the pandemic for at least I think two or three years. UM as China reopens, you know, obviously is one of the

biggest marketing almost like everything UM. Crypto itself also got excited, as you know, like travel is gonna gonna have be happening again and investors can fly out and in China, and so does I guess money. So the idea is that as China is, as you say, reducing the restrictions imposed to deal with the coronavirus and taking a more we'll just use the word open stands towards business and everything else, there might be hope that it may change

its approach to the crypto market. Yes, exactly. I think what happens is that, like a lot of countries, you know, people just assume that blockchain technology as part of the tech industry are being encouraged from the government. So, you know, as a techlock knowledge it self, blockchain has it's like sort of like potential saying China might as well just

encouraging business to start in China. So one of the important things that sounds like you're saying, and you know, this is definitely a conversation that we also had with David Pan and U h e Yang, are that it's not the China outright band all things crypto and blockchain. It's that there was a really pronounced crackdown on speculation

and speculative assets. But when it comes to to use your phrase, things like blockchain and the underlying technology, but also, as we've discussed on the show, you know, the idea of non speculative, non fungible tokens right which they're calling digital collectibles, that there may still be paths forward for

these sites types of assets. Yes, I agree on that, um, But for me, UM, I guess it's just a little bit too optimistic, because how do you sort of um, having a blog chain without the crypto that you made the structure doesn't really make sense, So UM, I am really not sure, like how promising the future is there for any sort of crypto complaints to restart um their entity? So whatsoever? In China? After the break you'll hear more from Mua Shan on how China stands on crypto could

with an emphasis on could benefit the industry. And you have you know, you have a lot of sources all over the world. Are you talking to folks who left China and moved to places like the US or Europe or the UK and they're thinking about going back or is it still too early for them? I think it's quite early. Um. Actually a lot of my sources who are original based in China have moved to places like Singapore where you know, or Dubai where they have a

strong Chin Chinese community as well. What I heard from them is that they're generally just sit on the sidelines and waiting until sort of more clear guidance from the government. UM. So far, I think the really positive signals has we only sent out from Hong Kong. The government is there. What they say sort of is a message of passing

through the Chinese guvernment in Beijing as well. Because you mentioned Hong Kong, this was a place that had attracted a lot of crypto talent, including interestingly enough, the folks from ft X and Alameda who had originally been based in Hong Kong, and many of them were still living there. And the reason that entities like f t X left and went to places like the Bahamas is because they thought that Hong Kong would also be cracking down on

crypto in the aftermath of the China crackdown. Is what I'm hearing from you that the atmosphere in Hong Kong is still less restrictive than on the mainland. What are

we hearing actually, UM? Recently, Hong Kong at an event that's very much focused on webs three development and UM the participants there, who I think a lot of them are from the Hong Kong government, was sending UM their encouraging messages to business about UM, we're welcoming webs three complaints to come here and to be part of the industry here in Hong Kong. UM. And I also heard their potentially they're going to be potentially sort of licensing

around trading crypto for retail investors in Hong Kong this year. UM. All of them sound quite a promising, I guess, but I think, like a lot of other industries that's non crypto, I think because the relationship between Hong Kong and Man in China, you know, all of this can be changed just overnight. UM. And I think people again, like most of them, are just sit on the sidelines and not sure if it's really a good time just to go

back to Hong Kong. And to your point about timing, you know, it's not like crypto markets are doing amazingly at the moment. Why would this be a moment that folks think that China might want to soften its stance given that other regulators around the world seem to be toughening up this I think that's a really good question.

I am not sure about that, you know, Like it's I hard not to mention our very well known China Chinese investor, Adjusting Song in this conversation, since he's one of sort of like the first people on Twitter mentioned about how China is sending a positive signals around this whole re opening and embracing cryptocurrency. But I would like to point out in his Twitter's threat about they're positive and they're optimism, he did not mention the word bloction

non crypto at all. So I feel like it's really a sort of guessing, you know, or like unders trying to understand what China is standing out at the moment. Got it now As a closing thought, you know, one of the stories that even covering for again, I have no idea what time is, but it feels like a long time is the ethereum merge, and the next phase of the ethereum Merge, which is, you know, the software upgrade that has made fundamental changes to how that blockchain functions.

The next software update is called Shanghai. Yes, why I think that's just I know, like I um so, when I was exploring the possibility of China reopening, which you know, possibly gonna help crypto and the next more ball market to take place in China and the result. As I mentioned,

this whole conversation hadn't been super exciting. Most most of them are just speculations based on what people are hearing from Hong Kong, based on what people are trying to make the connections between reopening and uh uh, which can be also encouraging for crypto and blockchain business. Um. At the you know, I was like, you know, you might as well just be positive since the next big upgrade on ethereans cars Shanghai, which you know that that is

as China as they can get. So it's not necessarily that they are directly related. But it's almost as if the universe is giving hints yes, yes, which you know, I think there are not much excaignment in the space at the moment, and you might as well just taken ending signs you can't get, just hoping that will happen. People are like scrabbling around being like is this good uses this could use let's find some good news. Yes? Um? Well, thank you as always, I appreciate you taking the time

to join the episode. Thank you for having me again pleasure. You can find more of MUA's reporting on the Bloomberg Terminal and on Bloomberg dot com, and be sure to check out our newsletter, Bloomberg Crypto. This is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the I Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Send us your comments, questions, or suggestions for the show

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