WEBVTT - Is China Poised to Relax Its Crypto Ban?

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<v Speaker 1>This is Bloomberg Crypto, a daily Bloomberg Ihad podcast, and

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<v Speaker 1>I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News.

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<v Speaker 1>It's Wednesday, February one. One of the biggest shocks to

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<v Speaker 1>the crypto markets in the past couple of years happened

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<v Speaker 1>in one when China issued its most significant crackdown yet

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<v Speaker 1>on all things digital assets fast forwards, and there are

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<v Speaker 1>signs of the country might be softening that stance ever

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<v Speaker 1>so slightly. Now, just to set the scene a little bit,

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<v Speaker 1>this is all related to broader signs and some speculation

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<v Speaker 1>that the country is quote unquote reopening. In other words,

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<v Speaker 1>that as China loosens the restrictions it had imposed to

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<v Speaker 1>deal with the coronavirus pandemic, that this is having benefits

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<v Speaker 1>in all different parts of the economy. Here with me

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<v Speaker 1>today to discuss China's potentially softening stance on crypto is

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<v Speaker 1>Bloomberg Reports. Muya Shin we are. One of the interesting

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<v Speaker 1>things to me about your reporting is that you go

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<v Speaker 1>from you know, writing about defy or staked ef two

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<v Speaker 1>big macroeconomic considerations like what's China doing with crypto? And

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<v Speaker 1>that's what we're going to focus on in this episode

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<v Speaker 1>before we dive into the very latest on what China

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<v Speaker 1>has been thinking about or doing as it relates to Krypto,

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<v Speaker 1>Why don't you kind of set the stage for our

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<v Speaker 1>listeners as to why China has for so long been

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<v Speaker 1>such a key player in the crypto ecosystem. I think China,

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<v Speaker 1>like many East Asian country has always been sort of

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<v Speaker 1>the first one to embrace a lot of new technologies

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<v Speaker 1>and blockchain crypto themselves, you know, included. And so I

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<v Speaker 1>think since bigcoin is born not long after, there's a

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<v Speaker 1>lot of excitement in the China community alone, and we're

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<v Speaker 1>seeing more people in China jump into bitcoin mining. In fact,

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<v Speaker 1>it got so exciting and China becomes sort of like

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<v Speaker 1>main market. That's behind the I see o booms in seventeen.

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<v Speaker 1>I see it is initial coin offerings after Etherian got

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<v Speaker 1>popular and people can launch all types of tokens only

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<v Speaker 1>theory and and while launching sort of like raising funds

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<v Speaker 1>through this token offering. So you had this I see

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<v Speaker 1>a boom, as you say, in twenties seventeen, and then

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<v Speaker 1>you had a couple of years of kind of like

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<v Speaker 1>intense growth, like what was happening. So what happened is

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<v Speaker 1>that while the bull market was you know, made everyone

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<v Speaker 1>so excited all that obvious, what came with I c

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<v Speaker 1>O as we all known today that maybe nine nine

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<v Speaker 1>of project has failed as a result that I think

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<v Speaker 1>a lot of retail users in China lost a lot

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<v Speaker 1>of money from that, and China realized that's kind of

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<v Speaker 1>like a problem they need sort of like address that.

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<v Speaker 1>I think since in China have been sending all sorts

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<v Speaker 1>of like discouraging messages around like being engaged in cryptocurrency,

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<v Speaker 1>and that went you really, really really severe, I think

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<v Speaker 1>in because one of the messages, you know, if I'm

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<v Speaker 1>thinking back to it's like a weekend. When the pronouncement

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<v Speaker 1>landed from China, there was this big focus on the

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<v Speaker 1>concern that declining crypto prices and to your point, investors

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<v Speaker 1>losing money could lead to societal up people. Yes, I

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<v Speaker 1>mean that has always been one biggest issue for Communist

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<v Speaker 1>Party in China, as someone who is from China. So

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<v Speaker 1>China did this crackdown, there was sort of an immediate

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<v Speaker 1>reaction in crypto markets, particularly in in bit coin, down

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<v Speaker 1>double digit percentages. As we've talked about extensively on this

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<v Speaker 1>podcast with our colleagues, you know, David Pan and Uh Eyang.

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<v Speaker 1>There were reverberations for bitcoin miners who had to literally

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<v Speaker 1>physically unplug all of their machines that were plugged in

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<v Speaker 1>Oliver China. Ship those machines out of the country, end

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<v Speaker 1>up in places like like Texas. You had a lot

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<v Speaker 1>of kind of startup and engineering and entrepreneurial talent leave

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<v Speaker 1>leave the mainland and go to the US, to the UK,

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<v Speaker 1>to Europe in some cases to Hong Kong, and then

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<v Speaker 1>you you kind of you know, you get into two.

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<v Speaker 1>It's crypto winter. There's no signs for most of two

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<v Speaker 1>that any of that might reverse. People aren't necessarily moving back.

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<v Speaker 1>But now it's and we're having a very different conversation.

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<v Speaker 1>What exactly is going on right now? I think everything

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<v Speaker 1>has to do this whole China reopening UM again after

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<v Speaker 1>perhaps the most severe like restrict starns around the pandemic

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<v Speaker 1>for at least I think two or three years. UM

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<v Speaker 1>as China reopens, you know, obviously is one of the

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<v Speaker 1>biggest marketing almost like everything UM. Crypto itself also got excited,

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<v Speaker 1>as you know, like travel is gonna gonna have be

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<v Speaker 1>happening again and investors can fly out and in China,

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<v Speaker 1>and so does I guess money. So the idea is

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<v Speaker 1>that as China is, as you say, reducing the restrictions

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<v Speaker 1>imposed to deal with the coronavirus and taking a more

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<v Speaker 1>we'll just use the word open stands towards business and

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<v Speaker 1>everything else, there might be hope that it may change

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<v Speaker 1>its approach to the crypto market. Yes, exactly. I think

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<v Speaker 1>what happens is that, like a lot of countries, you know,

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<v Speaker 1>people just assume that blockchain technology as part of the

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<v Speaker 1>tech industry are being encouraged from the government. So, you know,

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<v Speaker 1>as a techlock knowledge it self, blockchain has it's like

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<v Speaker 1>sort of like potential saying China might as well just

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<v Speaker 1>encouraging business to start in China. So one of the

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<v Speaker 1>important things that sounds like you're saying, and you know,

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<v Speaker 1>this is definitely a conversation that we also had with

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<v Speaker 1>David Pan and U h e Yang, are that it's

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<v Speaker 1>not the China outright band all things crypto and blockchain.

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<v Speaker 1>It's that there was a really pronounced crackdown on speculation

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<v Speaker 1>and speculative assets. But when it comes to to use

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<v Speaker 1>your phrase, things like blockchain and the underlying technology, but also,

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<v Speaker 1>as we've discussed on the show, you know, the idea

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<v Speaker 1>of non speculative, non fungible tokens right which they're calling

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<v Speaker 1>digital collectibles, that there may still be paths forward for

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<v Speaker 1>these sites types of assets. Yes, I agree on that, um,

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<v Speaker 1>But for me, UM, I guess it's just a little

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<v Speaker 1>bit too optimistic, because how do you sort of um,

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<v Speaker 1>having a blog chain without the crypto that you made

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<v Speaker 1>the structure doesn't really make sense, So UM, I am

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<v Speaker 1>really not sure, like how promising the future is there

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<v Speaker 1>for any sort of crypto complaints to restart um their entity?

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<v Speaker 1>So whatsoever? In China? After the break you'll hear more

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<v Speaker 1>from Mua Shan on how China stands on crypto could

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<v Speaker 1>with an emphasis on could benefit the industry. And you

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<v Speaker 1>have you know, you have a lot of sources all

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<v Speaker 1>over the world. Are you talking to folks who left

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<v Speaker 1>China and moved to places like the US or Europe

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<v Speaker 1>or the UK and they're thinking about going back or

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<v Speaker 1>is it still too early for them? I think it's

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<v Speaker 1>quite early. Um. Actually a lot of my sources who

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<v Speaker 1>are original based in China have moved to places like

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<v Speaker 1>Singapore where you know, or Dubai where they have a

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<v Speaker 1>strong Chin Chinese community as well. What I heard from

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<v Speaker 1>them is that they're generally just sit on the sidelines

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<v Speaker 1>and waiting until sort of more clear guidance from the government. UM.

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<v Speaker 1>So far, I think the really positive signals has we

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<v Speaker 1>only sent out from Hong Kong. The government is there.

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<v Speaker 1>What they say sort of is a message of passing

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<v Speaker 1>through the Chinese guvernment in Beijing as well. Because you

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<v Speaker 1>mentioned Hong Kong, this was a place that had attracted

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<v Speaker 1>a lot of crypto talent, including interestingly enough, the folks

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<v Speaker 1>from ft X and Alameda who had originally been based

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<v Speaker 1>in Hong Kong, and many of them were still living there.

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<v Speaker 1>And the reason that entities like f t X left

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<v Speaker 1>and went to places like the Bahamas is because they

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<v Speaker 1>thought that Hong Kong would also be cracking down on

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<v Speaker 1>crypto in the aftermath of the China crackdown. Is what

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<v Speaker 1>I'm hearing from you that the atmosphere in Hong Kong

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<v Speaker 1>is still less restrictive than on the mainland. What are

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<v Speaker 1>we hearing actually, UM? Recently, Hong Kong at an event

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<v Speaker 1>that's very much focused on webs three development and UM

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<v Speaker 1>the participants there, who I think a lot of them

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<v Speaker 1>are from the Hong Kong government, was sending UM their

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<v Speaker 1>encouraging messages to business about UM, we're welcoming webs three

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<v Speaker 1>complaints to come here and to be part of the

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<v Speaker 1>industry here in Hong Kong. UM. And I also heard

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<v Speaker 1>their potentially they're going to be potentially sort of licensing

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<v Speaker 1>around trading crypto for retail investors in Hong Kong this year. UM.

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<v Speaker 1>All of them sound quite a promising, I guess, but

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<v Speaker 1>I think, like a lot of other industries that's non crypto,

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<v Speaker 1>I think because the relationship between Hong Kong and Man

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<v Speaker 1>in China, you know, all of this can be changed

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<v Speaker 1>just overnight. UM. And I think people again, like most

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<v Speaker 1>of them, are just sit on the sidelines and not

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<v Speaker 1>sure if it's really a good time just to go

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<v Speaker 1>back to Hong Kong. And to your point about timing,

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<v Speaker 1>you know, it's not like crypto markets are doing amazingly

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<v Speaker 1>at the moment. Why would this be a moment that

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<v Speaker 1>folks think that China might want to soften its stance

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<v Speaker 1>given that other regulators around the world seem to be

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<v Speaker 1>toughening up this I think that's a really good question.

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<v Speaker 1>I am not sure about that, you know, Like it's

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<v Speaker 1>I hard not to mention our very well known China

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<v Speaker 1>Chinese investor, Adjusting Song in this conversation, since he's one

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<v Speaker 1>of sort of like the first people on Twitter mentioned

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<v Speaker 1>about how China is sending a positive signals around this

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<v Speaker 1>whole re opening and embracing cryptocurrency. But I would like

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<v Speaker 1>to point out in his Twitter's threat about they're positive

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<v Speaker 1>and they're optimism, he did not mention the word bloction

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<v Speaker 1>non crypto at all. So I feel like it's really

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<v Speaker 1>a sort of guessing, you know, or like unders trying

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<v Speaker 1>to understand what China is standing out at the moment.

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<v Speaker 1>Got it now As a closing thought, you know, one

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<v Speaker 1>of the stories that even covering for again, I have

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<v Speaker 1>no idea what time is, but it feels like a

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<v Speaker 1>long time is the ethereum merge, and the next phase

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<v Speaker 1>of the ethereum Merge, which is, you know, the software

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<v Speaker 1>upgrade that has made fundamental changes to how that blockchain functions.

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<v Speaker 1>The next software update is called Shanghai. Yes, why I

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<v Speaker 1>think that's just I know, like I um so, when

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<v Speaker 1>I was exploring the possibility of China reopening, which you know,

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<v Speaker 1>possibly gonna help crypto and the next more ball market

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<v Speaker 1>to take place in China and the result. As I mentioned,

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<v Speaker 1>this whole conversation hadn't been super exciting. Most most of

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<v Speaker 1>them are just speculations based on what people are hearing

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<v Speaker 1>from Hong Kong, based on what people are trying to

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<v Speaker 1>make the connections between reopening and uh uh, which can

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<v Speaker 1>be also encouraging for crypto and blockchain business. Um. At

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<v Speaker 1>the you know, I was like, you know, you might

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<v Speaker 1>as well just be positive since the next big upgrade

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<v Speaker 1>on ethereans cars Shanghai, which you know that that is

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<v Speaker 1>as China as they can get. So it's not necessarily

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<v Speaker 1>that they are directly related. But it's almost as if

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<v Speaker 1>the universe is giving hints yes, yes, which you know,

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<v Speaker 1>I think there are not much excaignment in the space

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<v Speaker 1>at the moment, and you might as well just taken

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<v Speaker 1>ending signs you can't get, just hoping that will happen.

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<v Speaker 1>People are like scrabbling around being like is this good

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<v Speaker 1>uses this could use let's find some good news. Yes? Um? Well,

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<v Speaker 1>thank you as always, I appreciate you taking the time

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<v Speaker 1>to join the episode. Thank you for having me again pleasure.

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<v Speaker 1>You can find more of MUA's reporting on the Bloomberg

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<v Speaker 1>Terminal and on Bloomberg dot com, and be sure to

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