Analysis
July 24, 2024 2:22 PM
Donald Trump has recently turned his attention to the world of cryptocurrencies, expressing concerns that China might take the lead if the U.S. remains passive. In a recent interview with Bloomberg, Trump stated, “If we don’t do it, China is going to pick it up and China’s going to have it—or somebody else, but most likely China.”
He added that his experience with the “Mugshot” NFT Collection, which saw 80% of sales paid in crypto, opened his eyes to the potential of digital assets.
China was once a major player in the crypto world, hosting large exchanges and accounting for up to 75% of Bitcoin mining. However, in 2021, China banned crypto trading and mining. Despite this, recent developments suggest China might be reconsidering its stance.
Hong Kong, under China's influence, has launched several Bitcoin ETFs, sparking speculation that China could use Hong Kong as a testing ground for reentering the crypto market.
Experts are divided on whether China regrets its 2021 crypto ban. Daniel Lacalle, chief economist of Tressis, believes China made a significant mistake, especially given its desire to de-dollarize.
Emiliano Pagnotta of Singapore Management University called the ban a “strategic blunder,” noting that China lost its dominant position in Bitcoin mining to the U.S. However, Yikai Wang from the University of Essex argues that China’s ban aligns with its desire to control capital outflows, a policy unlikely to change soon.
Hong Kong has always had a different economic policy from mainland China, favoring open markets.
This makes it a potential hub for crypto activities. Patrick Pan, CEO of OSL, noted that while mainland China maintains a strict stance against crypto trading, it has embraced blockchain technology, as evidenced by the development of the digital yuan.
While some believe China could regain its influence in the crypto sector, others, like economist Lacalle, are skeptical.
The global crypto landscape has become more diversified, making it difficult for any single nation to dominate. Moreover, China’s past actions have created a sense of insecurity among traders and miners, which could hinder its comeback.
Trump’s comments suggest that cryptocurrencies are becoming a new arena for geopolitical competition. He sees the potential for a Chinese-led central bank digital currency (CBDC) to challenge U.S. dominance.
By embracing crypto, Trump aims to position the U.S. as a leader in this emerging field, drawing a stark contrast to China's approach.
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