China might be nearing a shift in its stance on cryptocurrency ownership, as recent developments suggest. Major crypto exchange Bybit has reportedly resumed registration and authentication for users in China, despite the official government position remaining unchanged.
Popular crypto commentator Cyclops on X hinted that China might soon allow Bitcoin again, predicting significant market impacts, though not a 100-fold increase.
China’s History with Crypto
Since the inception of Bitcoin in 2009, China has had a complicated relationship with the cryptocurrency sector. For about a decade, the country allowed the industry to grow without officially legalizing it. Despite the lack of legal recognition, Bitcoin became popular among Chinese users, making them some of the biggest participants in the crypto market.
However, after the altcoin boom in 2017, China started cracking down on digital currencies. The government first banned Initial Coin Offerings (ICOs) and blacklisted certain exchanges. At that time, China was a dominant player in the crypto market, especially in Bitcoin mining.
This hostile policy led to a decline in the sector, with mining operations slowing down before being entirely banned in 2021. This prompted many miners to relocate to countries like the USA and Central Asian nations with cheaper electricity.
Current Landscape and Future Prospects
Despite the stringent regulations, China still has a large and enthusiastic crypto community. Activities such as using Bitcoin, NFTs, and public blockchains remain illegal and punishable by imprisonment. The country’s justice system has harshly penalized several high and low-profile crypto users, yet underground adoption persists.
Many Chinese crypto enthusiasts are hopeful for a policy change that would allow them to participate in the sector openly. The recent move by Bybit to resume registration for Chinese users could indicate a potential shift in the government’s approach.
One proposed idea is to permit mainland Chinese users to invest in crypto via ETFs and exchanges based in Hong Kong, where crypto is legal. Hong Kong has been a hub for digital currency development, with several top exchanges like Bitfinex and Binance originating there. If implemented, this approach could signal a significant change in China’s crypto policy.
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