After unveiling major announcements, towards the end of 2019, about the future of blockchain technology in China, the Bank of China is set to introduce a tough security token protocol soon. The bank is also seeking to create its cryptocurrency that will be centralized and pegged on the Chinese RenMinBi (RMB).
This has brought hope to blockchain startups in China where Security Token Offering (STO) campaigns were banned almost immediately after the Initial Coin Offering was banned in 2017.
China’s hard stand on Cryptocurrencies
Despite being the country with the most blockchain startups and cryptocurrency adopters worldwide, China has had a hard stand on cryptocurrencies. In 2017, just as cryptocurrencies were making their debut, China banned exchanges, ICOs and STOs making it practically impossible for blockchain startups to raise capital for their projects through fundraising campaigns.
Interestingly, China has also been very hard on the cryptocurrency miners even though the government controls some of the largest cryptocurrency mining rigs/facilities.
It appears Chinese officials, especially at the Bank of China, have finally realized that blockchain technology is here to stay.
China outlined its new strategy on cryptocurrencies and blockchain technology through Weimin Guo, the Chief Scientist at the Bank of China, in a Finance Technology Summit held towards the end of 2019.
Among those new strategies is the intention of China to release its cryptocurrency that shall be called China’s Digital Currency Electronic Payment (DCEP). The DCEP shall be a stablecoin pegged on the Chinese RenMinBi (RMB).
According to the DCEP developers, the introduction of the digital coin will streamline the obsolete traditional financial practices currently in use. They also anticipate that the digital coin will rival Bitcoin, one of the most adopted cryptocurrencies in the world.
According to Weimin Guo, Bitcoin failed in its purpose to provide a better financial market compared to avoid the manipulations of the traditional markets.
Proposed strict regulations on STOs
As China loosens its stand on cryptocurrencies and blockchain technology, it still wants to ensure that the technology is kept in check.
Among some of the strict regulations that China seeks to introduce is the tough security token protocol that will see all Security Token Offerings (STOs) operate within an austere “regulatory sandbox mechanism”. By giving STOs a leeway, the country seeks to promote blockchain technology innovations as it maintains complete control of the sector.
However, as China inches back into the game, it is interesting to see how the Chinese regulators continue to embrace blockchain technology. The country seems to be realizing that times are changing and changing fast. Regulators seem to have realized that the country has to embrace blockchain technology or get left behind as the completion across the world hits up. Other countries are doing all they can to ensure that they conform to the technology by introducing laws and regulations to govern it.