Both China and India have increased crypto regulation in recent months. These regulations have stifled the growing industry since being introduced. Let’s take a look at what has been happening in both countries and how it has impacted the crypto industry.
China first began to regulate cryptocurrency in September 2017, when the country banned initial coin offerings (ICOs). ICOs are a fundraising method where companies offer investors tokens in exchange for investment capital. This ban was followed by a crackdown on domestic exchanges in February 2018. As a result of these actions, the trading volume of Bitcoin fell by over 90%.
In India, the Reserve Bank of India (RBI) barred banks from dealing with cryptocurrency businesses in April 2018. This caused a number of exchanges to shut down, as they could no longer operate without banking support. The RBI also proposed a ban on crypto trading in 2019, although this has not yet been enacted.
The Chinese and Indian governments have taken very different approaches to cryptocurrency regulation. In China, the government has taken a hardline stance, banning ICOs and exchanges. However, in India, the government has only barred banks from dealing with crypto businesses. These contrasting approaches highlight the delicate position that cryptocurrency holds in both countries.
China was initially cautious in the development and application of blockchain technology. This was due to the technology’s relative anonymity and immutability of the information, as every blockchain transaction has a digital record and signature that can be identified, validated, stored, and shared. Many believed the blockchain technology could therefore become a double-edged sword for the Communist Party of China (CPC), as it would thwart the government’s efforts to censor content it considers sensitive and, in more general terms, efforts to assert its cyber-sovereignty.
The Indian government, on the other hand, has been outright hostile to cryptocurrencies. In 2017, the Reserve Bank of India (RBI) issued a warning against the use of virtual currencies, stating that they posed a risk to consumers and investors. The RBI’s position was further reinforced in 2018 when it barred banks from providing services to businesses or individuals dealing in cryptocurrencies. This move effectively put the brakes on the country’s burgeoning crypto industry, which had been growing in popularity in recent years.
Despite the historical struggle to adapt bitcoin and other crypto assets, both countries have softened their stance on blockchain technology in recent times. In February 2019, the India’s finance minister announced that the country was planning to establish a task force to study the feasibility of a central bank digital currency (CBDC). This move came just months after China’s president Xi Jinping declared that blockchain should play a “significant role” in the country’s future.
The changing attitude towards blockchain technology is indicative of a broader trend taking place in both countries. As they continue to develop economically, China and India are starting to see the potential benefits of cryptocurrencies and are slowly beginning to integrate them into their financial systems. In doing so, they are likely to provide a much-needed boost to the global crypto market.