China (Unofficially) Authorizes Bitcoin, Price Turns Bullish [UPDATE]
China’s Internet watchdog has announced that it can no longer “ignore its revolutionary changes” announcing that we have entered the “post-Bitcoin era."
UPDATE: Cointelegraph has been informed that the annoucement, on which the following article is based, was originally published in People's Daily, the official newspaper of the Chinese Communist Party with the CAC reposting it on their website. So while the article doesn't represent the opinion of the CAC, the People's Daily is a major publication in China, whose main readers are Chinese officials.
While many media outlets and financial experts have pointed to the large influx of funds from China to Western bitcoin exchanges as the cause of the recent bitcoin price spike, China’s Internet watchdog has announced that it can no longer “ignore its revolutionary changes” announcing that we have entered the “post-Bitcoin era."
Now it appears that China’ law enforcement and government agencies’ approach toward the cryptocurrency demonstrate may be easing. Based on recent events and publications from the Cyberspace Administration of China, the government seems to have tacitly authorized the use of bitcoin and operations of bitcoin startups and exchanges.
In a newly released publication, the CAC noted that the United States Commodity Futures Trading Commission (CFTC) officially defined bitcoin as a commodity and that its bank regulators stated that bitcoin will promote economic regulation of electronic money.
A section of the publication also added:
“Although some people think that bitcoin and its underlying technology, the blockchain, is not stable, we cannot ignore the revolutionary changes it brought to the financial sector. The new technology has led to the expansion of a distributed payment and settlement mechanism, which will innovate financial transactions.”
Furthermore, the CAC firmly believes that the “Post Bitcoin Era” has brought the properties of virtual currencies including bitcoin closer to real money through its secure and robust core functions and technical mechanisms. The CAC also cited the European approach to cryptocurrency and increasing interest from major banks.
“Recently the attention has shifted from the traditional financial sector to the blockchain technology.” reads the translated text. “For example, according to the European Banking Association (EBA) in its latest report, blockchain technology can lower costs, improve product supply and improve the speed of transaction settlement.”
Finally, the text also emphasizes that bitcoin is becoming more and more like a real currency with less volatility, announcing that we have entered into a new phase of development. An excerpt reads:
“Digital currencies have entered the ‘post Bitcoin era,’ away from the [volatility] and towards regulation and mainstream development.”
This publication was released on October 13, around the same time the price of bitcoin in China began to surge. Meanwhile, The Harvard Business Review China also hosted the 1st global blockchain Summit in Shanghai during this period, possibly adding to the bitcoin hype and buying pressure on local bitcoin exchanges.
While this unofficial announcement from the Chinese government seems to have boosted the bitcoin price by around 15%, it is important to realize that the largest bitcoin exchanges, businesses and mining pools are based in China and, in a few months, this could be the main factor driving up the bitcoin price.
[Editor's note: The excerpts were taken from their original text in Chinese and translated into English by a Chinese speaker.]