Ban or no ban, China’s crypto obsession is as strong as ever. Before the government stomped into the cryptocurrency industry, China was arguably the world’s leader. Its exchanges were the biggest and, at its heights, they controlled 70% of bitcoin’s hashrate. The ban was supposed to kill all that, but the roots were too strong. In Bloomberg’s recent “Inside China’s Crypto Scene, a Year After Sweeping Crackdown,” we learn where China’s crypto industry currently stands.

 The article cleverly compares the ban to “China’s decision in the 1990s to erect the Great Firewall,” which “gave the CCP unprecedented power to restrict the free flow of information.” Apparently, Bloomberg did the work. They claim the article is based on “Interviews with more than a dozen industry participants based in China, ranging from founders to programmers and operations specialists, paint a picture of a sector trying to find its path by experimenting with new products and services in the hope that regulators won’t crack down.”

Read the whole thing if you want a comprehensive picture of the current situation. We will focus on the quotes. On the protagonists’ reports from the grounds. 

Three Quotes That Speak Volumes

He’s the “founder of Folius Ventures, an investment fund focused on Asian crypto startups.” Jason Kam clues us in on the current state of China’s crypto development scene:

 “At its core, the Chinese government is going to dampen speculation and capital outflow, but for the remainder of web3, such as developers writing code, the government has a ‘one eye open, one eye closed’ approach.” 

She’s Chainalysis’ director of research. Kim Grauer explains a billion-dollar market for China’s crypto industry to tackle:

“There are informal crypto markets that are operating in kind of a legal gray area. We’ve talked with merchants who are in Sub-Saharan Africa and Latin America who are purchasing goods from China, using cryptocurrency in this informal market capacity. We can see people within China are still visiting major centralized exchanges.”

He’s the mind behind the Strxngers NFT collection. The pieces resemble “pixellated 80s-style computer game avatars”  and sold out in less than a minute. Its creator, Frank Chen, explains the reasoning behind the project:

“I picked NFT as an area to experiment within China because I don’t think the country is completely against it. Before any regulation on digital collectibles comes out, there’s a currently gray area that allows people to experiment.”

That’s an insider’s view of China’s crypto industry as it stands today. What about tomorrow, though?

BTC price chart for 10/24/2022 on Bitstamp | Source: BTC/USD on TradingView.com

China’s Crypto Solution

Scarily, the country’s crypto future looks like “permission-based blockchains under state oversight.” And the first iterations of that technology are already up and running in the Asian continent.  “Crypto is about trading and applications, and we are all about the tech infrastructure. Two entirely different worlds,” said Red Date Technology’s He Yifan. What does his company’s product look like?

“Unlike on a traditional blockchain like Ethereum, transaction costs are denominated in fiat currency and fixed at 0.05 yuan per transaction. Daily transactions on Red Date’s Blockchain-based Service Network have surged to over 1 million, according to He, comparable with volumes on Ethereum.”

Is this another way of realizing the promises of blockchain technology or is China’s crypto environment so toxic that they already ruined their part in the play without even knowing? Time will tell, but the whole situation is certainly exciting and surprising. Most people thought that the ban would kill China’s crypto industry, but look at them now. The party is just getting started.