While China is declaring war on cryptocurrency, the giant US banks seem to be embracing crypto-in the last week of July, the news that crypto company Lukka will provide is obvious Clients of State Street Private Equity Fund Provide digital and encrypted asset fund management services.This is after the following people entered the cryptocurrency field Bank of New York Mellon, JPMorgan, Citigroup and Goldman Sachs Among the heavyweights of traditional banks.
Is it too early to talk about trends and counter-trends? If a trade war breaks out between the United States and China, as many people believe, why China rejects cryptocurrencies, and some of the largest Western financial institutions that have long been cautious about cryptocurrencies seem to see new blockchain-based Value digital currency?
“Yes, Bank of America is firmly using Bitcoin as an investment tool,” the author of the book Nik Bhatia Layered currencies: from gold and U.S. dollars to bitcoin and central bank digital currencies An adjunct professor of finance and business economics at the University of Southern California told Cointelegraph that he added: “For example, JPMorgan Chase and Goldman Sachs provide their clients with Bitcoin investment products such as GBTC (Grayscale).”
CoinGecko co-founder and COO Bobby Ong told Cointelegraph: “We can see that banks and other financial institutions, such as JPMorgan Chase and Citigroup, are beginning to realize that blockchain technology is not just a short-lived trend.” He added. Said: “Therefore, they began to explore ways to provide customers with cryptocurrency products.”
But what about China? Since the beginning of summer, Take measures to contain — If not completely banned — cryptocurrency mining and trading. Do Chinese financial guardians know what the leaders of Bank of America do not know?
“China does not like encryption. It is not a sovereign currency and it is not controlled by the Chinese government,” Raymond Yeung, author China’s trump card: cryptocurrency and its game-changing role in Sino-US trade, Told Cointelegraph, adding: “Even if it is mined in China, it is still not managed by them-it bypasses PBoC (People’s Bank of China). This is unacceptable.”
“China is a country that wants to control everything,” Wang agreed. “This can be seen from the recent suppression of technology companies and even private education companies.” He suggested that the decentralized structure of Bitcoin makes the Chinese authorities very suitable. , They are more willing to create something they can manage, such as the digital renminbi they are launching.
Bitcoin (Bitcoin) Yang further explained that mining consumes a lot of energy and causes global warming. China has pledged to achieve carbon neutrality by 2060, and its “emission target is real.” The government is already imposing emission restrictions on the country’s steel industry and has just launched a national emissions trading program. Bhatia added: “China does not want Bitcoin miners to occupy their [energy] grid. ”
Has China made a mistake in its judgment?
If there is indeed a trade war between China and the United States, is it a misjudgment for China to shut down the BTC mining business, especially because North American miners are very willing to take over China’s role as the world’s cryptocurrency mining center?
“This is likely to be a huge mistake, because offline hash rates are difficult to recover,” Bhatia said, adding, “This hashing power may have left China forever.”
“I think it’s hard to say what China’s goal is in this particular situation,” Wang commented. He added: “They are actively trying to introduce the digital renminbi as the country’s de facto currency and as an agent to reduce the world’s dependence on the U.S. dollar.” Therefore, when it comes to core goals, this may not be a bad move: “This It is in line with their goal of promoting a centralized currency that is completely tracked by the government.”
There may also be some nuances in Bitcoin mining.The People’s Republic of China may use mining crackdowns to drive down the price of Bitcoin so that the country can buy more Bhatia suggested buying BTC at a cheaper price and further explained to Cointelegraph:
“They may not care about mining rewards anymore. They may try to obtain billions of bitcoins and use the mining ban as misleading. They may also use the coal mining ban as evidence that China is taking climate change seriously in order to Gain a more favorable position on the global stage.”
Others agree that China may have a hidden agenda. “The suppression of Chinese miners may mean that they are dumping their tokens into a light market and making us go lower,” according to Ben Sebley, chief growth officer of crypto company BCB Group.
Blockchain, but not encryption
On the other hand, Yang believes that China takes Bitcoin and other cryptocurrencies seriously, but this does not mean that it must abandon the underlying blockchain technology of encryption.
“The government is willing to sacrifice BTC or Ether,” Yeung told Cointelegraph, “but they don’t want to sacrifice blockchain technology.” In terms of blockchain technology development, China still has a lot to do. “The government cherishes technology, not cryptocurrency itself.”
In addition, as the government said, “Encryption is a source of financial risk,” Yang said, adding further, “They want to control encryption, but they can’t. But they can still adopt blockchain technology, and they think it will increase productivity. And stimulate economic growth.”
At the same time, Bank of America behaved like the cryptocurrency summer downturn never happened. Nadine Chakar, head of State Street Digital, said: “The popularity of digital assets shows no signs of slowing down, adding that State Street is “committed to continue building the necessary infrastructure to further develop our digital asset service model. ”
Ong told Cointelegraph: “People are increasingly accepting the role of Bitcoin as a hedge against the current fear of currency devaluation.” “After the announcement of an unexpected increase in inflation”-U.S. Inflation ski 5.4% in June, the fastest growth rate in 13 years-“Many people are considering alternative methods to protect their wealth, and Bitcoin is starting to become a viable alternative.” He added that banks are engaged in providing financial services As the demand for holding cryptocurrencies increases, it’s no surprise that they are eager to enter the industry.
Bank of America may also focus on future customers. “As young investors flood into the market, they are more likely to invest in riskier and diversified asset classes,” Ong said, adding:
“The lack of interest in slow-moving assets and the particular rise of’memetic stocks’ undoubtedly gave Bank of America some ideas on how to use this shift in investment methods.”
Bitcoin, as a security or an investment product that requires additional supervision, continues to avoid any scrutiny. This fact may also affect Bank of America’s calculations. “This is a commodity that can circumvent the U.S. Securities and Exchange Commission [regulation], This is essential,” Bhatia said.
Yeung concluded that the US and China’s regulatory approaches are philosophically different. The Chinese government basically said, You need my consent for anything you do, And the U.S. says, If you do anything to hurt me, I will forbid youHowever, American companies have more leeway. For example, if a U.S. court declares that BTC is a commodity, then regulators cannot prohibit it.
At the same time, if the younger generation turns to professional fund managers, they may at least be exposed to some crypto assets-which means that Western banks may take root in the crypto field in the next few years.