Speaker 1: This is Bloomberg Crypto, a daily Bloomberg Ihad podcast, and
Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News.
Speaker 1: It's Wednesday, February one. One of the biggest shocks to
Speaker 1: the crypto markets in the past couple of years happened
Speaker 1: in one when China issued its most significant crackdown yet
Speaker 1: on all things digital assets fast forwards, and there are
Speaker 1: signs of the country might be softening that stance ever
Speaker 1: so slightly. Now, just to set the scene a little bit,
Speaker 1: this is all related to broader signs and some speculation
Speaker 1: that the country is quote unquote reopening. In other words,
Speaker 1: that as China loosens the restrictions it had imposed to
Speaker 1: deal with the coronavirus pandemic, that this is having benefits
Speaker 1: in all different parts of the economy. Here with me
Speaker 1: today to discuss China's potentially softening stance on crypto is
Speaker 1: Bloomberg Reports. Muya Shin we are. One of the interesting
Speaker 1: things to me about your reporting is that you go
Speaker 1: from you know, writing about defy or staked ef two
Speaker 1: big macroeconomic considerations like what's China doing with crypto? And
Speaker 1: that's what we're going to focus on in this episode
Speaker 1: before we dive into the very latest on what China
Speaker 1: has been thinking about or doing as it relates to Krypto,
Speaker 1: Why don't you kind of set the stage for our
Speaker 1: listeners as to why China has for so long been
Speaker 1: such a key player in the crypto ecosystem. I think China,
Speaker 1: like many East Asian country has always been sort of
Speaker 1: the first one to embrace a lot of new technologies
Speaker 1: and blockchain crypto themselves, you know, included. And so I
Speaker 1: think since bigcoin is born not long after, there's a
Speaker 1: lot of excitement in the China community alone, and we're
Speaker 1: seeing more people in China jump into bitcoin mining. In fact,
Speaker 1: it got so exciting and China becomes sort of like
Speaker 1: main market. That's behind the I see o booms in seventeen.
Speaker 1: I see it is initial coin offerings after Etherian got
Speaker 1: popular and people can launch all types of tokens only
Speaker 1: theory and and while launching sort of like raising funds
Speaker 1: through this token offering. So you had this I see
Speaker 1: a boom, as you say, in twenties seventeen, and then
Speaker 1: you had a couple of years of kind of like
Speaker 1: intense growth, like what was happening. So what happened is
Speaker 1: that while the bull market was you know, made everyone
Speaker 1: so excited all that obvious, what came with I c
Speaker 1: O as we all known today that maybe nine nine
Speaker 1: of project has failed as a result that I think
Speaker 1: a lot of retail users in China lost a lot
Speaker 1: of money from that, and China realized that's kind of
Speaker 1: like a problem they need sort of like address that.
Speaker 1: I think since in China have been sending all sorts
Speaker 1: of like discouraging messages around like being engaged in cryptocurrency,
Speaker 1: and that went you really, really really severe, I think
Speaker 1: in because one of the messages, you know, if I'm
Speaker 1: thinking back to it's like a weekend. When the pronouncement
Speaker 1: landed from China, there was this big focus on the
Speaker 1: concern that declining crypto prices and to your point, investors
Speaker 1: losing money could lead to societal up people. Yes, I
Speaker 1: mean that has always been one biggest issue for Communist
Speaker 1: Party in China, as someone who is from China. So
Speaker 1: China did this crackdown, there was sort of an immediate
Speaker 1: reaction in crypto markets, particularly in in bit coin, down
Speaker 1: double digit percentages. As we've talked about extensively on this
Speaker 1: podcast with our colleagues, you know, David Pan and Uh Eyang.
Speaker 1: There were reverberations for bitcoin miners who had to literally
Speaker 1: physically unplug all of their machines that were plugged in
Speaker 1: Oliver China. Ship those machines out of the country, end
Speaker 1: up in places like like Texas. You had a lot
Speaker 1: of kind of startup and engineering and entrepreneurial talent leave
Speaker 1: leave the mainland and go to the US, to the UK,
Speaker 1: to Europe in some cases to Hong Kong, and then
Speaker 1: you you kind of you know, you get into two.
Speaker 1: It's crypto winter. There's no signs for most of two
Speaker 1: that any of that might reverse. People aren't necessarily moving back.
Speaker 1: But now it's and we're having a very different conversation.
Speaker 1: What exactly is going on right now? I think everything
Speaker 1: has to do this whole China reopening UM again after
Speaker 1: perhaps the most severe like restrict starns around the pandemic
Speaker 1: for at least I think two or three years. UM
Speaker 1: as China reopens, you know, obviously is one of the
Speaker 1: biggest marketing almost like everything UM. Crypto itself also got excited,
Speaker 1: as you know, like travel is gonna gonna have be
Speaker 1: happening again and investors can fly out and in China,
Speaker 1: and so does I guess money. So the idea is
Speaker 1: that as China is, as you say, reducing the restrictions
Speaker 1: imposed to deal with the coronavirus and taking a more
Speaker 1: we'll just use the word open stands towards business and
Speaker 1: everything else, there might be hope that it may change
Speaker 1: its approach to the crypto market. Yes, exactly. I think
Speaker 1: what happens is that, like a lot of countries, you know,
Speaker 1: people just assume that blockchain technology as part of the
Speaker 1: tech industry are being encouraged from the government. So, you know,
Speaker 1: as a techlock knowledge it self, blockchain has it's like
Speaker 1: sort of like potential saying China might as well just
Speaker 1: encouraging business to start in China. So one of the
Speaker 1: important things that sounds like you're saying, and you know,
Speaker 1: this is definitely a conversation that we also had with
Speaker 1: David Pan and U h e Yang, are that it's
Speaker 1: not the China outright band all things crypto and blockchain.
Speaker 1: It's that there was a really pronounced crackdown on speculation
Speaker 1: and speculative assets. But when it comes to to use
Speaker 1: your phrase, things like blockchain and the underlying technology, but also,
Speaker 1: as we've discussed on the show, you know, the idea
Speaker 1: of non speculative, non fungible tokens right which they're calling
Speaker 1: digital collectibles, that there may still be paths forward for
Speaker 1: these sites types of assets. Yes, I agree on that, um,
Speaker 1: But for me, UM, I guess it's just a little
Speaker 1: bit too optimistic, because how do you sort of um,
Speaker 1: having a blog chain without the crypto that you made
Speaker 1: the structure doesn't really make sense, So UM, I am
Speaker 1: really not sure, like how promising the future is there
Speaker 1: for any sort of crypto complaints to restart um their entity?
Speaker 1: So whatsoever? In China? After the break you'll hear more
Speaker 1: from Mua Shan on how China stands on crypto could
Speaker 1: with an emphasis on could benefit the industry. And you
Speaker 1: have you know, you have a lot of sources all
Speaker 1: over the world. Are you talking to folks who left
Speaker 1: China and moved to places like the US or Europe
Speaker 1: or the UK and they're thinking about going back or
Speaker 1: is it still too early for them? I think it's
Speaker 1: quite early. Um. Actually a lot of my sources who
Speaker 1: are original based in China have moved to places like
Speaker 1: Singapore where you know, or Dubai where they have a
Speaker 1: strong Chin Chinese community as well. What I heard from
Speaker 1: them is that they're generally just sit on the sidelines
Speaker 1: and waiting until sort of more clear guidance from the government. UM.
Speaker 1: So far, I think the really positive signals has we
Speaker 1: only sent out from Hong Kong. The government is there.
Speaker 1: What they say sort of is a message of passing
Speaker 1: through the Chinese guvernment in Beijing as well. Because you
Speaker 1: mentioned Hong Kong, this was a place that had attracted
Speaker 1: a lot of crypto talent, including interestingly enough, the folks
Speaker 1: from ft X and Alameda who had originally been based
Speaker 1: in Hong Kong, and many of them were still living there.
Speaker 1: And the reason that entities like f t X left
Speaker 1: and went to places like the Bahamas is because they
Speaker 1: thought that Hong Kong would also be cracking down on
Speaker 1: crypto in the aftermath of the China crackdown. Is what
Speaker 1: I'm hearing from you that the atmosphere in Hong Kong
Speaker 1: is still less restrictive than on the mainland. What are
Speaker 1: we hearing actually, UM? Recently, Hong Kong at an event
Speaker 1: that's very much focused on webs three development and UM
Speaker 1: the participants there, who I think a lot of them
Speaker 1: are from the Hong Kong government, was sending UM their
Speaker 1: encouraging messages to business about UM, we're welcoming webs three
Speaker 1: complaints to come here and to be part of the
Speaker 1: industry here in Hong Kong. UM. And I also heard
Speaker 1: their potentially they're going to be potentially sort of licensing
Speaker 1: around trading crypto for retail investors in Hong Kong this year. UM.
Speaker 1: All of them sound quite a promising, I guess, but
Speaker 1: I think, like a lot of other industries that's non crypto,
Speaker 1: I think because the relationship between Hong Kong and Man
Speaker 1: in China, you know, all of this can be changed
Speaker 1: just overnight. UM. And I think people again, like most
Speaker 1: of them, are just sit on the sidelines and not
Speaker 1: sure if it's really a good time just to go
Speaker 1: back to Hong Kong. And to your point about timing,
Speaker 1: you know, it's not like crypto markets are doing amazingly
Speaker 1: at the moment. Why would this be a moment that
Speaker 1: folks think that China might want to soften its stance
Speaker 1: given that other regulators around the world seem to be
Speaker 1: toughening up this I think that's a really good question.
Speaker 1: I am not sure about that, you know, Like it's
Speaker 1: I hard not to mention our very well known China
Speaker 1: Chinese investor, Adjusting Song in this conversation, since he's one
Speaker 1: of sort of like the first people on Twitter mentioned
Speaker 1: about how China is sending a positive signals around this
Speaker 1: whole re opening and embracing cryptocurrency. But I would like
Speaker 1: to point out in his Twitter's threat about they're positive
Speaker 1: and they're optimism, he did not mention the word bloction
Speaker 1: non crypto at all. So I feel like it's really
Speaker 1: a sort of guessing, you know, or like unders trying
Speaker 1: to understand what China is standing out at the moment.
Speaker 1: Got it now As a closing thought, you know, one
Speaker 1: of the stories that even covering for again, I have
Speaker 1: no idea what time is, but it feels like a
Speaker 1: long time is the ethereum merge, and the next phase
Speaker 1: of the ethereum Merge, which is, you know, the software
Speaker 1: upgrade that has made fundamental changes to how that blockchain functions.
Speaker 1: The next software update is called Shanghai. Yes, why I
Speaker 1: think that's just I know, like I um so, when
Speaker 1: I was exploring the possibility of China reopening, which you know,
Speaker 1: possibly gonna help crypto and the next more ball market
Speaker 1: to take place in China and the result. As I mentioned,
Speaker 1: this whole conversation hadn't been super exciting. Most most of
Speaker 1: them are just speculations based on what people are hearing
Speaker 1: from Hong Kong, based on what people are trying to
Speaker 1: make the connections between reopening and uh uh, which can
Speaker 1: be also encouraging for crypto and blockchain business. Um. At
Speaker 1: the you know, I was like, you know, you might
Speaker 1: as well just be positive since the next big upgrade
Speaker 1: on ethereans cars Shanghai, which you know that that is
Speaker 1: as China as they can get. So it's not necessarily
Speaker 1: that they are directly related. But it's almost as if
Speaker 1: the universe is giving hints yes, yes, which you know,
Speaker 1: I think there are not much excaignment in the space
Speaker 1: at the moment, and you might as well just taken
Speaker 1: ending signs you can't get, just hoping that will happen.
Speaker 1: People are like scrabbling around being like is this good
Speaker 1: uses this could use let's find some good news. Yes? Um? Well,
Speaker 1: thank you as always, I appreciate you taking the time
Speaker 1: to join the episode. Thank you for having me again pleasure.
Speaker 1: You can find more of MUA's reporting on the Bloomberg
Speaker 1: Terminal and on Bloomberg dot com, and be sure to
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