“China will open up to cryptocurrencies”

The co-founder of the Tether company, Brock Pierce, believes that China will change its stance on banning cryptocurrencies. For the businessman and philanthropist, it is only a matter of time before the Asian giant recognizes digital assets as legitimate.

After his participation in the Solowin and Sequire Asia Investor Summit, Pierce stated: “Will China open up to cryptocurrencies? I would say it is inevitable. The question is not so much if, but when.”

Likewise, Pierce showed his interest in Hong Kong, which could act as gateway of digital assets to the Chinese market. It is worth noting that the Securities and Futures Commission (SFC) recently approved bitcoin (BTC) spot ETFs and provided clear guidelines for investors. In that sense, he expressed:

«I think Hong Kong is ahead in many ways. “The main opportunity in Hong Kong is in trade, and that is where a digital Hong Kong dollar stablecoin has tremendous potential.”

Brock Pierce, co-founder of Tether

As Criptonoticias already reported, the Chinese government in 2021 prohibited various activities with BTC, including trading, transactions and mining. Through a document issued by the People’s Bank, these types of operations are “strictly prohibited and firmly prohibited in accordance with the law” and clarifies: “All those who carry out illegal financial activities incur crimes and will be investigated.”

Now, and amid a growing expectation that China will reverse this policy, the co-founder of the company that issues USDT, the stablecoin with the largest market capitalization, opened the possibility of cryptocurrencies being accepted in that country.

If it happens, this could have a significant impact in terms of adoption and investor influx.

Consequences of China’s cryptocurrency mining ban

In July 2021, the government banned the mining of BTC and other cryptocurrencies in its territory, with the aim of reducing electricity consumption.

This measure was a direct blow to the hashrate of the Bitcoin network, because it momentarily stopped the growth in the mining industry, which stood out for innovation in the creation of more efficient equipment and technology for this practice.

As Criptonoticias already reported, this policy ended with a significant exodus of miners, who migrated to countries with more friendly regulations for the sector such as the United States and Kazakhstan.

Furthermore, as a consequence of this ban, there was clandestine mining in China. To do this, small miners manage to continue operating and divide their operations into several farms distributed throughout the country. Thus, authorities have difficulty detecting them.

Other miners use local energy sources, such as hydroelectric dams in rural areas independent of China’s main energy grid.

Is Hong Kong bitcoin ETF the first step?

Since 1997, Hong Kong has legally belonged to China, but has the status of a special administrative region, with its own regulations and legislation. It is for this reason that cryptocurrencies are not prohibited.

Following the approval of BTC spot ETFs, analysts suggested that Hong Kong could be the Chinese government’s test laboratory. If these financial instruments are successful in that territory, perhaps the Asian giant will change its position on digital assets.

As Sina G., co-founder of financial analysis and investment firm 21st Capital, notes, “Hong Kong’s potential approval of spot bitcoin ETFs is the most significant development in the market today.”

Furthermore, he considers that “this measure could open the floodgates of Chinese investors’ money into BTC, offering these investors a lifeline to move their wealth out of a faltering market and into one of the best-performing assets in history.