China’s quest for blockchain dominance in the future of finance
As the global race for control over the future of money and finance intensifies, China has strategically positioned itself to assert dominance in the blockchain realm. Through a multifaceted approach, the Asian giant aims to exert influence on both the mainland and the Hong Kong Special Administrative Region.
This article explores China’s calculated moves in the blockchain space and their implications for the future of finance based on several facts put forth by industry experts.
China’s dualistic approach to crypto
Amid Beijing’s ban on global crypto networks within its borders, China is simultaneously developing and promoting its own next-generation monetary technologies. Related to this, the mainland has pushed for the establishment of a National Blockchain Research Center which aims to train 500,000 industry professionals. It is also actively testing the usefulness of the digital yuan in some of its key locations in an effort to accelerate its rollout.
These initiatives have the potential to give the Chinese Communist Party government more control over the financial landscape. Likewise, this dual approach allows China to maintain a tight grip on its domestic financial activities while exploring opportunities within the global crypto market.
Hong Kong: a strategic gateway
Exploiting Hong Kong’s potential as a special administrative region, China has built a significant presence in global digital asset markets. Hong Kong-based companies, even though their operations are tied to the US dollar, play an important role in establishing the region as a dynamic and thriving financial center for digital assets.
A prominent example is Tether, the globally known stablecoin, which further strengthens Hong Kong’s position in the free market digital asset ecosystem.
Embrace Open Blockchain Networks
China’s state-owned Bank of China recently issued debt on Ethereum through its Hong Kong-based investment arm. This move demonstrates China’s willingness to tap into open blockchain networks for its own purposes while maintaining control over its citizens’ financial activities.
By embracing these technologies, China aims to reap the benefits of blockchain while maintaining its sovereign control.
Encouraging banking services for crypto exchanges
Hong Kong regulators are pressuring major banks within their jurisdiction to provide banking services to crypto exchanges. This is in stark contrast to the situation in the United States, where many banks are reluctant to engage with crypto clients due to legal uncertainties.
The readiness of Hong Kong’s banking sector, exemplified by HSBC’s recent offering of Bitcoin and Ethereum ETFs to clients, demonstrates China’s commitment to facilitating the growth of crypto within its strategic gateway.
China’s internal control and global ambitions
China’s use of Hong Kong as a financial center allows the Chinese Communist Party to maintain internal financial controls while preventing capital flight. By placing global crypto networks under the jurisdiction of Hong Kong, China seeks to exploit the disruptive benefits of these networks without compromising its ambitions to design and control its own financial networks.
Final thoughts
China’s strategic moves in the blockchain industry demonstrate its determination to dominate the future of money and finance. Through a two-pronged approach that includes strict control within its borders and facilitating crypto activity in Hong Kong, China aims to leverage its influence on both the domestic and global stage.
As China gains a foothold in blockchain, the implications for the future of finance are profound and will shape the landscape of financial technologies in years to come.
Giancarlo is an economist and researcher by profession. Prior to his addition to Blockzeit’s dynamic team, he handled several crypto projects for both the government and private sector as a consultancy project manager.