If you are an investor interested in the Chinese Cryptocurrency market, it is important to know what you are buying. There are several factors that can affect the value of your investment, including a government that is hostile to the technology. However, if you understand the risks and how they will impact you, you can make an informed decision and get the most out of your investment.
Bitcoin is the most demanded digital asset in China
When it comes to China’s crypto market, the digital currency Bitcoin is the most demanded. But this isn’t because of the digital coin’s popularity in China. It’s because of how the nation’s government views it.
The Chinese government argues that the virtual currency poses a threat to the financial stability of the country. Moreover, the government is worried about cryptocurrencies’ association with money laundering.
In addition, the government is concerned about the potential impact of cryptocurrency mining on the environment. As a result, local authorities have shut down several crypto mining operations. However, the government has not banned the activity entirely.
Rather, the government is trying to discourage people from participating in the booming crypto sector. To discourage employment, the government has issued a series of warnings. This includes a stipulation that residents in China can’t use the digital currency for transactions.
Several other countries have banned the trading of cryptocurrencies. These include Algeria, Morocco, Tunisia, Bangladesh, Iraq, and Oman.
Initial coin offerings (ICOs) were banned in 2017
In September of last year, China banned initial coin offerings (ICOs) and crypto tokens. This move came as a response to the massive growth of these types of fundraising activities. ICOs are new fundraising methods that leverage the distributed ledger technology behind cryptocurrencies, making it easier for businesses to raise funds.
Chinese financial regulators are not only banning the trade of ICO tokens, but also ordering issuers of the virtual coins to refund investors. The government argues that ICOs are a threat to the country’s economic order, citing the potential to be used in fraudulent transactions.
According to the Chinese government, ICOs have the potential to disrupt the nation’s financial system and even cause money laundering. They have also been cited as a possible source of terrorist financing.
In addition to the ban, the Chinese government has outlined a number of penalties for those involved in ICOs. For example, those that conduct illegal fund raising can be prosecuted and face up to five years in prison. Moreover, those that engage in pyramid selling or other similar activity may be charged with fraud and face life imprisonment.
Pre-sales are a good way to hedge against the fluctuating yuan
If you are in the Chinese cryptocurrency space you probably have heard of the TAMA token, a $100 million dollar project which uses the latest in distributed ledger technology to enable peer to peer transactions between private individuals. Interestingly, this particular blockchain is not only a good ol’ fashioned cashless transaction, it is also a harbinger of change. For example, if you spend $20,000 on TAMA tokens you will be matched by the tokens in return. So if you are interested in a slick crypto exchange then you should really consider this.
There is one caveat though. Although the TAMA token has been around since 2013, the company is still in stealth mode. Hence, you will not see much of it until you actually buy it. Its predecessor, the Xinyuan, has been on and off the radar for over a decade. While the company has been around the block, it is a relatively small fish compared to the likes of the NYSE, NASDAQ, and Hong Kong Stock Exchange.
U.S. regulatory risks and challenges for U.S.-China crypto competition
The United States must respond to China’s anti-competitive practices. It should target China’s behavior bilaterally and in trade and legal actions. This will require additional export controls and investment restrictions, improved supply chain security, and stronger visa screening.
The United States should create a new international body of democratic powers to coordinate technology policy and counter China’s anti-competitive practices. These new institutions must develop innovative solutions to combat the Communist Party’s illiberalism.
A new economic toolkit can be a valuable complement to the economic incentives provided by a strong Indo-Pacific partnership. It would focus on targeting actors that facilitate the growth of China’s high-tech illiberalism, such as foreign companies, mixers, and actors that facilitate the spread of cyber-enabled illicit financial flows.
Despite the growing public awareness of cryptocurrencies, many countries do not write clear regulations governing them. Consequently, enforcement is challenging. In addition, there is inconsistency in international regulations, making it difficult to establish consistency.