In his recent appearance, Lark Davis delved deep into China’s ever-evolving relationship with cryptocurrency, a topic that has fascinated many within the digital currency world. The CoinSpeech team has meticulously collected the most important insights from Lark Davis’s discussion. For those eager to dive directly into the video, you can find Lark Davis’s new video below.
Historical Context of China’s Crypto Landscape
China, as the world’s second-largest economy, has had a “complicated relationship with cryptocurrencies.” The Chinese populace was among the first globally to embrace Bitcoin and other early cryptocurrencies. Davis highlighted, “Back then, Mainland Chinese exchanges were launching left, right, and center… China became the world’s largest market for both crypto trading and for crypto mining.”
However, concerns over capital controls led the Chinese government to enact its first crypto ban in 2013, and a more severe crackdown in 2021 essentially outlawed crypto exchanges and mining operations within the country. Surprisingly, this hasn’t quelled the crypto enthusiasm among Chinese citizens. Davis pointed out, “Many citizens in China still deal on a regular basis with crypto, VPNs, peer-to-peer trading… they’re one of the biggest markets in the world.”
Signs of a Softening Stance
Davis brought attention to several indicators suggesting the Chinese government might be reconsidering its hardline stance on crypto:
- Hong Kong Bitcoin ETF: The launch of Bitcoin and Ethereum spot ETFs in Hong Kong is seen as a significant move, possibly hinting at official backing from the CCP in Beijing.
“Hong Kong’s green lighting the Bitcoin and Ethereum spot ETFs likely only happened because of some level of official backing from the CCP in Beijing.”
- Stock Connect Program: Harvest Global Investments CEO Han Toh stated their plans for Bitcoin and Ethereum ETFs to reach investors in China. If these ETFs enter the stock connect program, a significant pathway for Mainland Chinese investors could open up, leading to a potential inflow of capital.
“If we manage to get the ETFs into the stock connect program, then a new investment path will be opened up for investors in the mainland of China.”
- ICBC’s Analysis Report: The Industrial and Commercial Bank of China, the world’s largest lender, released a report likening Bitcoin to gold and Ethereum to oil, marking a significant shift in attitude.
“The fact that the ICBC would just publicly release a report of this nature without the approval from some of the CCP’s top brass is evidence this is Beijing potentially thawing towards crypto.”
Economic Factors at Play
Davis also mentioned China’s ongoing real estate crisis, which has dramatically impacted the wealth of the middle and upper classes. Analyzing this context, he argued, “The CCP might actually be looking for alternative investments to offer to its citizens as a way to reduce the risks of widespread social unrest,” and Bitcoin ETFs could be a viable alternative.
Where is This Heading?
While the signs are there, Lark Davis remains cautious about predicting a sudden, total shift in China’s crypto policy. He suggests that the CCP will probably take a “nuanced and indirect approach in terms of crypto, slowly thawing and they’ll open up different ways for Mainland institutions and investors to access Bitcoin and Ethereum.” This could be managed through controlled and monitored channels like ETFs, allowing the CCP to still oversee capital flows effectively.
To get a full grasp of these developments, watch the complete analysis by Lark Davis: