• China had banned all crypto mining projects two years ago in order to become more energy efficient.
• Recently, reports have emerged that China is loosening its stance on cryptocurrency and may allow some activities to take place.
• A recent report from the New York Federal Reserve suggests that such a move would not significantly impact the price of bitcoin, but rather make it behave more like „digital gold“.
China’s Crypto Ban
Two years ago, the Chinese government announced a ban on all digital currency mining projects as part of their new energy regulations from Beijing. This meant that all crypto activities were prohibited, and anyone caught engaging in them could face financial penalties or even prison sentences.
Change of Stance?
Recently, there are reports that China – particularly Hong Kong – is going to soften its hard stance on cryptocurrencies. It has been speculated that this could provide bitcoin with an opportunity to grow in the coming weeks and months.
NY Fed Report
A report issued by the New York Federal Reserve suggested that such a move would not likely hold any significant sway over the bitcoin price. Unlike other asset classes, it claims that bitcoin does not react strongly to changes in monetary and macroeconomic news, which casts doubt on discount rates when pricing bitcoin.
Simon Peters of e-Toro fame believes that this report supports bitcoin’s status as „digital gold,“ meaning it behaves more like precious metals or stocks than traditional currencies do.
It remains to be seen whether or not China will actually loosen its stance on cryptocurrencies; however, if they do so it could be beneficial for Bitcoin’s growth over time and cement its reputation as a viable alternative asset class similar to precious metals or stocks.