Look at what they do, not what they say.
I met someone within the Indian finance ministry and as I showed him a slide on how various developed and developing nations are progressing on cryptocurrencies while India is not, he asked me a question: 'But China has banned crypto - why do you have them on the list?' I don't typically use internet slang but this was when I had to use one - SMH. Shaking My Head - a show of disappointment.
Ever since I moved into digital assets after 10 years in investment banking, I have been extensively travelling the globe to understand the digital assets space. While I have also travelled to China and met many people from the digital assets ecosystem within the country, the Indian government just seems to be using inaccurate media narrative and headlines to assume that there is no such activity in China.
Anyways, for everyone who thinks China is not doing anything on crypto and blockchain:
Just in the last month China announced that it would accelerate blockchain development, passed a cryptography law, announced the initiation of process to develop a digital currency, and scrapped plans to ban mining. The announcement on blockchain was done by none other than President Xi Jinping himself. Government announcements:
Most crypto proponents in the US are in fact looking at this as a massive loss to the US who have themselves not been so proactive in developing these laws, even though crypto activity in the country is high and the ecosystem is solid.
Even before these recent announcements the situation was as follows in China:
Crypto trading : While general perception is that crypto trading is banned, the OTC and P2P market is thriving ( Huobi OTC has been trading $100 million each day). Let's not forget Hong Kong, which is a huge hub for crypto activity, with established players such as Bitmex and Bitfinex. Mining : Bitmain, one of the world's largest mining business, is based in Beijing. Mining, as the name suggests, is a way of mining bitcoin and other cryptocurrencies whereby miners receive them as block rewards and transaction fees. Again, media reports would suggest mining was under the scanner in China; however more and more miners in China are establishing elsewhere, not because of local issues, but due to intense local competition! Protocols : China is home to multiple blockchain protocols all of whom have their native cryptocurrency that incentivises people on the networks. NEO, Ontology, Vechain, QTUM and Nebulas are some of the protocols to come out of China. Scoring (official) : China’s Center for Information and Industry Development releases a Global Public Blockchain Technology Assessment Index on a periodic basis, where they rank the various protocols (and hence the underlying native cryptocurrencies) as per a proprietary scorecard. Hong Kong : As with traditional finance, Hong Kong is an important hub for digital assets as well, and it offers as a medium to do business off-shore while having a high probability of accessing mainland China as well. Even if China has a ruling on crypto, it can still benefit from the global (or at least Asian) crypto activity through Hong Kong. While India is looking at Gift City as a competitor to HK and Singapore, I am not sure where we are with it, especially given ILFS owned 50 percent of it. Funds and Investors : China (Beijing and Shanghai primarily) house a lot of funds dedicated to crypto, and while some of them may have been burnt from the volatility and not investing as much now, it is still a hub for start-ups to have a much higher chance for funding their blockchain and crypto projects.
In summary, the headline of this article is moot as we can only lose a fight that we have even realised is a fight. We are not even close to understanding what this space entails but the potential is so evident and we are not even looking to have active public-private dialogues to get this moving.
To be honest, we are still fairly early within this space and have the opportunity to scale new heights, GLOBALLY. I sincerely hope that the Indian government focuses on this sector which has the potential to be as big as the internet with a
400 percent increase in blockchain jobs accounting to a revenue of up to $10 billion for the country, and not lose out as we have done in the past. I am voluntarily throwing my hat into the ring for anyone, anyone within the government who wants to discuss ANYTHING around this space, and work together in building a regulatory structure around blockchain and crypto that protects India’s interests while also positioning us at the forefront of this revolutionary technology and asset class. Prashanth Swaminathan is an alumnus from IIT Guwahati and IIM Calcutta, who spent 10 years in investment banking at Morgan Stanley London. Along with esteemed advisors within this space and crypto, he is currently building a global product called ‘Tandem’ that aims at higher adoption of digital assets. Read his columns