Chinese Authorities Backtracking On Bitcoin Stance

For the past 2 months there seems to have been nothing else but negative Bitcoin moves by Chinese authorities. Warnings and restrictions were just short of banning Bitcoin in China and shook up the market to the point where the Bitcoin price halved within days. Now there is some glimmer of hope if a Chinese Central Bank official is to be believed. It appears that China is not intent on suppressing Bitcoin but just wants to clarify its status.

Naturally Bitcoiners in China will not immediately be breathing a sigh of relief. Actions speak louder than words and the actions of Chinese authorities of late seems to be anti-Bitcoin. The most recent move that enraged the Bitcoin community was due to the airing of a Bitcoin-bashing TV program on a government backed station a few days back.

Bitcoin Is A Virtual Good, Not Currency

The chief of the survey and statistics department of the central bank (People’s Bank of China), Sheng Song Cheng, has stated that the institution is not trying to suppress Bitcoin use in China. The issue is, according to Cheng, that Bitcoin is seen as a virtual good and not a currency. He was responding to a question about China’s recent moves that seems to be anti-Bitcoin. In his exact words, Cheng said:

“We don’t want to suppress or discriminate against bitcoin, we are simply saying it is not a currency.”

One would think that Bitcoiners will obviously not be satisfied with the stance. The community sees Bitcoin as a currency, albeit it a digital currency, and wants it recognized as such by the authorities. However, some appear to be taking the news in an optimistic light while others are still cautious as can be seen in the opinions expressed on Reddit comments about China’s Bitcoin issues.

China Not Different From Other Nations

Cheng stressed that China’s official approach to Bitcoin is not significantly different from that of authorities in other nations. And he cannot be faulted on this statement. Governments around the world have been issuing warnings and imposing restrictions on Bitcoin-related operations. Some have outright prohibited Bitcoin, others are mulling over the issue and the vast majority are fence-sitters.

Only a handful of nations, like Singapore, have said that they will not interfere in Bitcoin matters and have even clarified how they will tax it.  But China’s unlikely to slip under the radar of the Bitcoin community just yet. The fact is that there have been many moves by Chinese authorities that have almost suffocated the cryptocurrency in China and had repercussions across the globe.

China Has Global Leverage

The official push against Bitcoin started in December 2013. First the Chinese government banned banks and other financial institutions from having anything at all to do with Bitcoin. Then it restricted third party payment providers from doing business with Bitcoin exchanges. The Bitcoin community is well aware of how these moves hurt the prices of Bitcoin and cost a lot of people a lot of money.

The new year started with even more Chinese merchants shunning Bitcoin. Then the TV program a few days ago caused somewhat of a scare. The program was blatantly biased towards Bitcoin and only focused on the “horror stories” of those who lost money following the Bitcoin price plunge in December 2013, which was essentially driven by the Chinese government itself. It was on obvious move to detract new Bitcoiners.

China has one of the largest Bitcoin communities and the actions and sentiment of its citizens have a direct effect on Bitcoin trading and its price. Ultimately it has a global effect. While Cheng may be correct to some degree that it is not out of character for a government authority to be cautious about Bitcoin these days, the Chinese government also has to realize that the large Bitcoin user base within its country gives it unique power of a global impact.

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