This weekly roundup of news from mainland China, Taiwan, and Hong Kong attempts to curate the industry’s top news, including influential projects, changes in the regulatory landscape, and corporate blockchain integrations.
Taking action in China: week 7
The summer of the raids continued this week, so seven weeks have passed since the initial announcement on May 18 that virtual currencies are a risky investment and financial institutions shouldn’t be serving them. The crackdown appears to be having the desired effect as public interest in the asset class wanes. This is illustrated by 90-day lows in WeChat searches for the word “Bitcoin” this past weekend, although this was a trend that was also reflected in Google searches worldwide.
The central bank was the attacker this week, posting an announcement on its website on July 6th that it and other relevant institutions will not be allowed to directly or indirectly offer virtual currency services to their customers. The announcement also mentioned that institutions cannot provide services such as business premises, commercial displays, marketing campaigns and payment redirects for business activities related to virtual currencies. As usual, the comments on Weibo have been strong for regulation as China’s social media still has a vocal section of traditional investors.
Jack Mas Fund monkeys in
On July 1, NFT gaming giant Animoca Brands announced that it had received a $ 50 million investment from Blue Pool Capital. Blue Pool Capital was founded in 2015 by tech entrepreneur Jack Ma and manages a portion of his net worth of $ 52.1 billion. Blue Pool Capital also manages a portion of the assets of Joe Tsai, the current Executive Vice Chairman of Alibaba. Animoca Brands develops and publishes NFT games such as REVV Motorsport and The Sandbox.
Miners in the money
The BTC mining hash rate is still down around 50% as Chinese miners sit on the sidelines or try to move. This resulted in a difficulty adjustment in the Bitcoin consensus algorithm, which made mining of blocks easier by about 28%. As a result, the remaining miners became an estimated 50% more profitable, according to a report by Cointelegraph.
Many people, including Galaxy Digital CEO Mike Novogratz, spoke about the positive effects of the current raid. Zap Finance’s Nick Spanos stated that Bitcoin is an unstoppable machine as “the world’s second largest economy cannot crush, devalue or manipulate Bitcoin”. This Spanos conclusion ignores the fact that China is getting very little societal value from crushing or devaluing Bitcoin. Current policy is more interested in eliminating inefficient energy use and risky, speculative trading behavior.
Crossing the border
On July 6, the Beijing Municipal Civil Affairs Bureau banned the China Blockchain Application Research Center. Specific reasons for the ban were not given, although the official response alleged that the research center was engaged in illegal social activities. It is likely that the center was involved in cryptocurrency and was traded as illegal given the official nature of its name. It is very common for organizations to adopt official sounding names in order to raise their status in the industry.
The China Blockchain Application Research Center was established in Beijing in November 2015 by the Museum of Internet Finance and several other institutions in the blockchain industry. It claimed to have established regional centers in Hangzhou, Shanghai, Silicon Valley and Dubai. In hindsight, their contribution to the industry appears to have been minimal, which makes this lawsuit more ceremonial than anything else.