Since the inception of Bitcoin in 2009, China has consistently intensified its stance on cryptocurrencies with unwavering frequency: precisely every four years, to be exact. In the upcoming months, the People’s Republic may indicate a shift in its position, prompting the financial world to pay attention.
In 2013, it mandated that payment providers terminate services to platforms, which were well-known sites at the time for individuals exchanging yuan for Bitcoin. In 2017, authorities prohibited initial coin offerings. Various outlets have ceased operations. The most significant setback for the industry occurred in 2021, when regulators announced that all crypto trading by Chinese nationals was deemed illegal, even on foreign exchanges. As we approach the four-year anniversary of the last significant tightening, it seems likely that authorities will soon shift their stance, opting for a more relaxed approach.
The reason is the US dollar. Or to be more precise, a projected influx of dollar-pegged stablecoins. Now that the US has given its regulatory nod to these 1:1 clones of fiat money, the 5.7 trillion stablecoin market is set to double. As transactions grow and an increasing number of digital dollars are created, they will pose a challenge to monetary sovereignty globally.