PBoC says no to virtual currencies, Jack Ma’s fund invests $50m into NFT game maker, searches for BTC in China at 90 day low
This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.
China crackdown: Week 7
The summer of crackdowns continued this week, making it seven weeks since the initial announcement on May 18 that virtual currencies were a risky investment and financial institutions should not provide services for them. The crackdown appears to be having a desired effect as public interest in the asset class is cooling. This is evident by 90-day lows on WeChat searches for the word ‘Bitcoin’ over the past weekend, although this was a trend mirrored on worldwide Google searches as well.
The central bank was the aggressor this week, posting an announcement on its website on July 6 that it and other relevant institutions are not allowed to directly or indirectly provide customers with virtual currency-related services. The announcement also mentioned that institutions can not provide services such as business venues, commercial displays, marketing campaigns and payment diversion for business activities related to virtual currencies. As usual, comments on Weibo were strongly in favor of the regulation as China’s social media still has a vocal section of traditional investors.
Jack Ma’s fund apes in
On July 1, NFT gaming giant Animoca Brands announced it had received $50 million in investment from Blue Pool Capital. Blue Pool Capital was created by tech entrepreneur Jack Ma in 2015 and manages a portion of his $52.1 billion net worth. Blue Pool Capital is also managing a portion of Joe Tsai’s wealth, who is the current Executive Vice Chairman of Alibaba. Animoca Brands develops and publishes NFT games such as REVV Motorsport and The Sandbox.
Miners in the money
The BTC mining hash rate is still down around 50% as Chinese miners sit on the sidelines or look to relocate. This led to a difficulty adjustment in the Bitcoin consensus algorithm, making blocks around 28% easier to mine. As a result, the remaining miners became an estimated 50% more profitable, according to a report in Cointelegraph.
Many people, including Galaxy Digital CEO Mike Novogratz, spoke out about the positive consequences of the current crackdown. Nick Spanos of Zap Finance stated that Bitcoin was an unstoppable machine due to the fact that “the world’s second-biggest economy can’t crush, devalue and manipulate Bitcoin.” This conclusion from Spanos ignores the fact that China derives very little social value from crushing or devaluing Bitcoin. The current policy is more interested in eliminating inefficient use of energy and risky, speculative trading behavior.
Crossing the line
On July 6, the Beijing Municipal Civil Affairs Bureau banned the China Blockchain Application Research Center. Specific reasons for the ban were not given, although the official response claimed that the research center was carrying out illegal social activities. It’s likely the center had been involved with cryptocurrencies, and considering the official nature of their name, was deemed to have acted illegally. It’s very common for organizations to take official sounding names in an attempt to improve their status within the industry.
The China Blockchain Application Research Center was founded in Beijing in November 2015 by the Museum of Internet Finance and some other institutions in the blockchain industry. It claimed to have regional centers set up in Hangzhou, Shanghai, Silicon Valley and Dubai. In hindsight, their contribution to the industry appears to have been minimal, making this legal action more ceremonial than anything.
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Author: Ben Yorke