A false trade war? China is clearing the crypto battlefield for investors

At the identical time that China is declaring battle on cryptocurrencies, big US banks look like accepting crypto – apparently in the final week of July with the information that the crypto firm Lukka will present cryptocurrency companies in fund administration. This follows forays into the crypto house by BNY Mellon, JPMorgan, Citigroup, and Goldman Sachs amongst the conventional heavyweights.

Is it too early to speak about tendencies and countertrends? And if a trade battle breaks out between the United States and China, as many imagine, why then is China turning away from cryptocurrencies whereas a few of the largest monetary establishments in the West which have lengthy been cautious of crypto appear to be seeing new worth in the digital forex blockchain ? Platform?

Nik Bhatia, writer of the e book: “Yes, US banks use Bitcoin as an investment vehicle. Money Layering: From Gold and Dollars to Bitcoin and Central Bank digital currencies and an assistant professor of finance and business administration at the University of Southern California, told Cointelegraph, adding, “For example, JPMorgan and Goldman have green bitcoin investment products like GBTC (Grayscale) for their clients.

“We can see banks and other financial institutions like JPMorgan and Citi gradually realizing that blockchain technology is more than a passing trend,” CoinGecko co-founder, founder and CEO Bobby Ong told Cointelegraph. He added that “as such, they are beginning to explore ways in which to offer crypto products to their customers.”

But what about China? Since the beginning of the summer, it has taken steps to restrict – if not completely ban – the mining and trading of cryptocurrencies. Do China’s Financial Defenders Know What America’s Banking Leaders Do?

“China doesn’t like cryptocurrencies. It is not a sovereign currency and is beyond the control of the Chinese government, ”mentioned Raymond Yeung, writer of China’s Trump Card: Cryptocurrency and Its Breakthrough Role in Sino-American Commerce, instructed Cointelegraph, including, “Even if it is mined in China, it is still not regulated by them – it has outperformed the PBoC (People’s Bank of China). This is unacceptable.”

Ong agrees: “China is a country that wants to keep everything under its control. He suggested that Bitcoin’s decentralized structure is the right fit for Chinese authorities and that they want to create something they can manage, such as their digital yuan.

Yeung went on to explain that Bitcoin (BTC) mining uses too much energy and contributes to global warming, which also doesn’t help. China has pledged to be carbon neutral by 2060 and “the emissions target is real”. The government has imposed emission restrictions on the country’s steel industry and has just introduced a national emissions trading system. Bhatia added, “China does not want to attract bitcoin miners [energy] Network. “

Is China Wrong?

However, if a trade war is really going on between the U.S. and China, it’s not that China made a mistake in closing its BTC mining operations, especially since North American miners are all too excited about China’s role as the world’s crypto mining hub to take over ?

“That could be a big mistake as hash rates that go offline are very difficult to get back,” said Bhatia, adding, “That hash power could have left China forever.”

“I think it’s hard to say what China’s goal is in this particular situation,” commented Ong. He added, “They are actively trying to introduce the digital yuan as the de facto domestic currency and proxy to reduce the world’s dependence on the US dollar.” When it comes to the core objective, this may not be a bad move: “It is in line with their goal of promoting a centralized currency that can be fully tracked by the government.”

There may also be some nuances associated with Bitcoin mining. The People’s Republic of China may be using the mining crackdown to bring the price of Bitcoin down so the state can buy it as Bhatia suggests BTC at a cheaper price, further explaining to Cointelegraph:

“You may no longer care about mining rewards. They may be trying to get billions of bitcoins and using the mining ban as a deception. You could also use the coal mining ban as evidence that China is serious about climate change in order to achieve a more favorable global position. “

Others agree that China may have a hidden agenda. According to Ben Sebley, chief growth officer of crypto firm BCB Group, “cracking down on Chinese miners could mean putting coins in a thin market and bringing us down.”

Blockchain, but not a cryptocurrency

On the flip side, Yeung believes China is serious about washing its hands with Bitcoin and other cryptocurrencies, but that doesn’t mean it has necessarily abandoned the underlying blockchain technology of cryptocurrencies.

“The government is ready to sacrifice BTC or Ether,” Yeung told Cointelegraph, “but they don’t want to sacrifice blockchain technology.” There is still a lot going on in China in terms of blockchain technology development. “Governments value technology, but not cryptocurrency itself.”

Furthermore, as the government has stated, “cryptocurrency is a source of financial risk,” added Yeung, including, “They want to control cryptocurrencies but they cannot. But they can still leverage blockchain technology, which they believe will improve productivity and drive economic growth. “

Related: Death bell for Chinese crypto miners? The rigs are moving after the government crackdown

Meanwhile, US banks are acting like an unprecedented crypto summer. “The growth in the popularity of digital assets shows no signs of slowing,” said Nadine Chakar, director of State Street Digital, adding that State Street “is not waning,” said Nadine Chakar, director of State Street Digital, the infrastructure needed to move to further develop our digital asset service models. “

Ong told Cointelegraph, “There is growing acceptance of Bitcoin’s role as a hedge against currency devaluation fears.” “Following the announcement of an unexpected spike in inflation” – US inflation rose 5.4% in June, the fastest pace for 13 years – “many have been looking for alternative ways to maintain their finances. Your wealth and Bitcoin are gradually becoming a viable alternative. ” “Banks offer financial services, and as the demand for crypto holdings grows, it’s no surprise that they are eager to get into the industry,” he added.

American banks can also keep an eye on future customers. “As large numbers of younger investors enter the market, they are more likely to invest in more diversified and riskier asset classes,” said Ong.

“The lack of interest in slowly revolving assets, as well as the particular surge in ‘meme stocks’ have certainly given US banks some ideas on how to capitalize on this shift in the stock market. Investment method.”

The fact that Bitcoin, as a security or as an investment product that requires additional supervision, continues to elude any scrutiny, could also influence the calculations of the US banks. “It’s a commodity and can bypass the SEC [regulation]which is essential, ”mentioned Bhatia.

Related: Has China’s Cryptocurrency Industry Disappeared? Beijing’s crackdown continues to create shock waves

Yeung summarizes the American and Chinese regulatory approaches as philosophically totally different. Basically, the Chinese authorities says: You want my approval for the whole lotwhereas the US mentioned If you damage me, I’ll forbid you. However, US firms have extra vacancies. For instance, if US courts declare BTC as a commodity, regulators can’t prohibit it.

In the meantime, if a youthful technology turns to skilled cash managers, they may possible anticipate not less than some publicity to crypto belongings – which suggests western banks might strive their hand at crypto house in the years to come back.