China has recently announced that the Cyberspace Administration of China, the organization responsible for the formulation and implementation of policy on issues related to online activity of various kinds, has recognized the need to recognize and understand the Bitcoin market.
Noting the recent ruling by the United States Commodity Futures Trading Commission that deems Bitcoin a commodity, the Chinese authority has suggested that third party bitcoin transfers should be included in banking regulations. In addition they highlight the possibilities of the underlying blockchain technologies for a variety of applications beyond the cryptocurrency market itself.
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With the recent announcement by the Cyberspace Administration of China (CAC) that it is time for them to recognize and pay heed to the Bitcoin market, it is clear that we have moved to the ‘post-bitcoin era’, where the currency has matured enough to be considered established. Indeed, the CAC noted that it “Can no longer ignore its revolutionary changes”, also suggesting that the argument that the blockchain technology it is built on being unstable is probably over. Given around 80% of the global bitcoin trading volume takes place in China, this move should not come as a surprise.
Building on the recent acceptance of Bitcoin as a commodity by the United States Commodity Futures Trading Commission, the Chinese authority have suggested that third party Bitcoin transactions should fall under the control of banking regulations as well due to the need to “promote economic regulation of electronic money”.
While this may alarm some, with the thought of more regulation resulting in slowed development, intrusion into the system and so on, the Chinese point to Europe, where regulation of cryptocurrency has been rolled out already, and the greater adoption of Bitcoin that has been seen since, Many suggest that with some level of regulation, trust is built for potential new users that leads to adoption of the currency, of course, getting the balance right between overly intrusive regulation and enough to bring the trust needed for wide scale use is a difficult thing to achieve.
The CAC also noted that with some level of regulation, the door is opened to further research through the state into using the core technology and functionality of Bitcoin for the development of a true digital currency.
Accepting the possibilities and the influence of Bitcoin by such organizations should be a sign of optimism for digital currencies, the shift to being an accepted form of currency for the wider public has to involve government recognition, and while there is always a concern over regulation, in that it can go too far, Europe has shown that some level of regulation brings in more users, not less. A Chinese sponsored look into the possibilities of blockchain technology and the development of digital currencies is sure to help both awareness of the technology and innovation within the industry.