A new crypto law
It was a surprise on Friday when the Chinese president, Xi Jinping, gave a boost to the crypto market when he announced he had overseen a government study on innovation and blockchain. China has banned cryptocurrency trading since 2017, yet, in his speech he emphasized the need to expand and improve applications in blockchain and its vital role in the economic industry.
In the speech, he advocated the use of Distributed ledger technology (DLT) particularly in a state-run digital currency. China has wanted to increase the use of blockchain in various state-owned or managed sectors such as customs, healthcare, and banking.
After this, there was a 25% increase in the crypto asset markets that added $50 billion in total market cap just over the weekend. Many of those also included altcoins that started to increase.
On Saturday, one day after this announcement, the Chinese congress passed a law that will come into effect Jan.1 2020. This new law aims to tackle emerging regulatory and legal challenges in commercial cryptography use cases as they play an increasingly important role in developing the Chinese economy. The draft proposal states:
“Clear guidelines and regulations are needed to evaluate commercial cryptography technologies used in the major fields related to the national interest as the current ‘loose’ system is not suitable for the industry anymore.”
Hints that DCEP is right around the corner
This news backs what they have been talking about for a while. The arrival of their currency DCEP, or The Chinese Digital Currency/Electronic Payments system.
China’s DCEP would be issued in a ‘two-tiered’ system. It would first connect to the People’s Bank Of China (PBoC) with commercial banks in the country in order to issue the digital currency. The second will work to connect the commercial banks to retailers, businesses, and individuals.
People believe that Facebook’s announcement to present Libra motivated the Chinese authorities to get the show on the road for their on DCEP.
Korea getting on the bandwagon
South Korea follows the news by announcing that the country will invest 12.8 million in blockchain projects in 2020, which was confirmed by the Ministry of Science and ICT. This will help boost public and private sector blockchain initiatives.
KISA, which reports to the ministry (Korea Internet and Security Agency), will provide over $8.6 million to develop services that can be used by public institutions as well as private sectors. NIPA (National IT Industry Promotion Agency) which is currently government-run and operated on overseeing free blockchain training sessions, will sponsor 3.4 million USD. This will go to fund more blockchain training and nurturing specialized blockchain companies.
Not too fast, bitcoin bulls.
It’s not all roses and rainbows. Reuters announced today that a local news outlet, the People’s Daily Beijing, should not look at this as support for crypto but what it really is, support for blockchain.
According to Reuters, The People’s Daily is a publication under the direct control of the ruling political power, the Communist Party of China. The Publication wrote:
“The rise of blockchain technology was accompanied by that of cryptocurrencies, but innovation in blockchain technology does not mean we should speculate in virtual currencies.”