Amid recent social media reports suggesting China may lift its long-standing ban on Bitcoin, the cryptocurrency community remains doubtful about the likelihood of such a move.

On July 14, Galaxy Digital CEO Mike Novogratz shared on X (formerly Twitter) that he had heard rumors of China potentially “unbanning” Bitcoin by late 2024. “If this is true, and it’s the second time I’ve heard it in weeks, it’s a huge deal,” Novogratz commented, seeking more insights from the community.

Historical Context of China’s Bitcoin Bans

China has a history of imposing restrictions on Bitcoin and other cryptocurrencies. Despite these bans, the country has maintained a significant presence in Bitcoin mining and other crypto activities. Many in the community remain skeptical, recalling China’s repeated bans on Bitcoin-related activities, including a major crackdown in 2021 and a ban on crypto exchanges in 2017.

One commenter on Novogratz’s post noted, “They have banned it like six times, and nothing has happened. The same thing will happen when they ‘unban’ it multiple times.”

Optimism Amid Skepticism

Some industry observers remain cautiously optimistic. Recent criticism of China’s approach to crypto regulation has fueled speculation. For instance, in late June, Wang Yang, a professor at the Hong Kong University of Science and Technology, criticized China’s ban on crypto mining. He argued that the ban was “very unwise” and that it pushed related businesses to the United States.

Source: Mike Novogratz

Industry Experts Doubt a Reversal

Despite the optimism, several industry figures believe China is unlikely to change its stance on Bitcoin. Yifan He, CEO of Chinese blockchain firm Red Date Technology, expressed strong doubts.

“If you refer to ‘unban Bitcoin’ as China allowing Chinese citizens to buy Bitcoin with renminbi from inside China, it is not going to happen, period,” He told.

Similarly, Mikko Ohtamaa, co-founder of algorithmic investment protocol Trading Strategy, argued that a reversal would contradict the Chinese government’s political agenda.

“China’s concern with crypto has always been the capital flight. Cryptocurrencies further democratize finance and enable capital flight for middle and low-income classes,” Ohtamaa explained.

Conclusion

The recent speculation follows incorrect predictions that Hong Kong’s launch of spot Bitcoin and Ether exchange-traded funds (ETFs) in April 2024 would open the market for mainland Chinese investors. Local experts confirmed that ETF issuers cannot provide such exposure despite their close ties with mainland China. The community remains cautious, awaiting concrete developments before drawing any conclusions about China’s stance on Bitcoin.

Following a recent court ruling in Illinois that classified Bitcoin and Ether as commodities, Nigerian stakeholders are calling on the Nigerian Securities and Exchange Commission (SEC) to adopt a similar approach. This move aims to provide a tailored regulatory framework that reflects the unique characteristics of these digital assets.

Importance of Clear Guidelines

Lucky Uwakwe, chairman of the Blockchain Industry Coordinating Committee of Nigeria (BICCoN), emphasized the need for clear guidelines on crypto asset classification.

“The Nigerian SEC should make rules that define the asset class of crypto assets or break respective crypto into asset classes and explain to the public how such crypto qualifies to be called securities or commodities,” Uwakwe told.

He noted that while the US SEC and the Commodity Futures Trading Commission (CFTC) agree on classifying Bitcoin and Ether as commodities, the distinction between proof-of-stake (PoS) and proof-of-work (PoW) protocols could affect the classification of specific crypto assets.

Advocacy for Individual Scrutiny

Oladotun Wilfred Akangbe, chief marketing officer at Flincap, highlighted the multifaceted nature of cryptocurrency and the varied interest from multiple Nigerian governmental bodies, including the CBN, SEC, FIRS, and NSA. Akangbe stressed the need for distinct regulatory approaches for Bitcoin and Ethereum compared to other cryptocurrencies.

“Foundational cryptocurrencies such as Bitcoin and Ethereum have become very valuable commodities, and assets are priced in them,” Akangbe said.

He suggested that the SEC should primarily focus on using cryptocurrencies as fundraising instruments, such as initial coin offerings (ICOs).

Local crypto analyst Rume Ophi argued that each cryptocurrency is unique and should be scrutinized individually to determine whether it qualifies as a security or a commodity.

Path to Comprehensive Regulation

The stakeholders’ recommendations are crucial as Nigeria seeks to establish a comprehensive regulatory framework for digital assets. By considering Bitcoin and Ether as commodities, the Nigerian SEC can provide much-needed clarity and stability in the market, encouraging innovation while ensuring regulatory compliance.

This approach aims to position Nigeria at the forefront of the global financial landscape by providing a robust and clear regulatory environment for digital assets.

A UK-based Bitcoin organization is urging the new Labour government to implement a Bitcoin mining strategy to address the growing local electricity demand. Bitcoin mining offers various potential uses beyond network security, such as powering machine learning and large gaming setups. Bitcoin Policy UK advocates using Bitcoin mining to support sustainable grids and renewable electricity generation.

Bitcoin Mining and Renewable Energy

A report released by Bitcoin Policy UK on July 10 highlights that the Bitcoin mining industry, a major electricity purchaser, could help make the intermittent supply of power from renewable grids more robust and viable. The report emphasizes that Bitcoin mining provides a completely elastic demand for spare renewable energy, setting a floor price and monetizing otherwise unused energy.

The organization argues that Bitcoin mining could operate without government subsidies or payments, using stranded or wasted energy. The report suggests that Bitcoin mining is the perfect technology to address the viability issues of the UK’s energy ambitions, noting its absence in the UK market on a large scale.

Examples and Potential

In Texas, Bitcoin mining is already used as a flexible load, with miners providing an interruptible load that can be shut off instantly to respond to grid demand and repowered afterward. The report claims this approach could solve the commercial viability issues of the UK’s energy security strategy targets, assuring renewable energy providers of a buyer for all the energy they produce.

Government and Industry Response

Bitcoin Policy UK is pushing for this new strategy following the UK elections on July 4, which resulted in a Labour government. The new government announced plans to establish a National Wealth Fund worth £7.3 billion to support green industries. The local crypto community has called for a more consistent policy on crypto.

Freddie New, co-founder and head of policy at Bitcoin Policy UK, expressed hopes for policies that protect and preserve the rights of UK citizens who hold Bitcoin. He noted that the previous government aimed to turn the UK into a “crypto hub” but fell short due to poorly conceived regulation. New highlighted the untapped potential of the Bitcoin mining industry for stabilising and monetising sustainable power grids and reducing methane and biogas emissions if co-located on farms or near landfills.

Bitcoin Policy UK looks forward to collaborating with the new government on Bitcoin-related policies, aiming to leverage Bitcoin mining to enhance the UK’s renewable energy grid and ensure energy security.