Cryptocurrency market may experience a massive shift with the possibility of China being at the helm of a $1.4 trillion shakeup. This is based on the recent policies that have begun to be implemented in China towards cryptocurrencies as well as its efforts to shape the direction of the future of assets and blockchain solutions.
Despite this, the current changes could potentially make the nation a major participant in world crytpocurrency environment as it did not have a friendly attitude towards cryptocurrency in the past.
China Cryptocurrencies Policy Shift
Primarily, China has had a very anti-crypto approach with its authorities having placed a ban on activities like Initial Coin Offerings and operation of all cryptocurrency exchanges within this country.
However, while China has severely cracked down on traditional digital currencies such as Bitcoin, it has always been supportive of blockchain technology and Fintech innovations. In the meantime, People’s Republic of China has introduced several projects in past few years such as Digital Yuan or its Central Bank Digital Currency.
This development means that though China has not embraced decentralised currencies, it appreciates the role of digital currencies in the formation of future financial systems. The Chinese government has also dedicated resources to the advancement of blockchain technologies with an aspiration to be the world’s most prominent country in this industry.
Such a two-faced policy of condemning unregulated cryptocurrencies and at the same time actively promoting its tested state-controlled version indicates the possibility of China’s influence on the further transformation of the crypto market on the international level.
Potential $1.4 Trillion Market Impact
Experts believe that China’s potential crypto market upset may shake markets to the tune of $1.4 trillion. This estimation is due to the fact that China is the second largest economy in the world, possess advanced technology and has a dominant controlling power over the financial system of Asia. China had the power to control and highly regulate this market, and the actions taken can set new trends that other nations may either emulate, or respond to in a fashion that affects the crypto market all around the world.
It is predicted that the introduction of the Digital Yuan will make other nations either speed up their CBDC development process or change their stance when it comes to cryptocurrencies’ regulation. For that, China could set reference for the valuation of digital currency and guide the behavior of investors and regulating entities across the globe.
How the Digital Yuan Fits into the Puzzle
The Digital Yuan introduced formally by the People’s Bank of China is at the heart of the nation’s desire to dominate the emerging digital finance industry. China is using it digital currency to try and unseat the US Dollar as the primary currency of international trade as it seeks to spill into international finance.
The government piloted the CBDC across the main cities and is still looking forward to taking the CBDC to another level regarding cross-border use thereby causing an implication on other global markets.
Despite the fact that the Digital Yuan has it controlled by the state and lacks decentralization, which is appreciated by most crypto enthusiasts, it can contribute to the integration of blockchain into the existing financial systems. This also has implications to other countries to show how national digital currencies can be used and affect cross-border trade.
China’s Global Influence on Crypto Regulation
However, the Chinese investors’ involvement in the cryptocurrency market doesn’t only confine to China. The Chinese authorities have been holding negotiations with the international organizations and they have been discussing the creation of the ad-hoc regulation of the digital assets. It has advocated for partnership with other countries especially those in Asia to Harbor policies on the risks associated with the digital currencies.
On the same note, if China charts a course and fully embraces digital currencies and manages to set robust frameworks of regulation then other countries may emulate its actions. Many nations in the European Union, Africa, and the Americas have been watching how China conducts its policies and a global change of regulations on cryptos could set in according to China.