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Why China's stance on cryptocurrency isn't new

Decrypt Editor-in-Chief Dan Roberts explains why China's most recent crackdown on cryptocurrency isn't all that different from the country's previous stance on crypto.

Video transcript

ADAM SHAPIRO: You can still trade crypto via Hong Kong. So is this a pie crust threat from the Chinese, easily made, easily broken?

DAN ROBERTS: Well, one thing that we should caution, Adam, is that you see China bans crypto headlines every few weeks now. And there's a little bit to separate kind of what's real from what's retreading of old news. Often, in the last year or so, what has happened is the Chinese government or various financial regulator groups there have simply reissued and reiterated the same statements they've made in the past.

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So, for people in the crypto space, they sort of roll their eyes every time you see what we saw last Friday, which was a new slew of stories saying China has banned crypto. China hasn't really changed its stance on cryptocurrency. It doesn't like cryptocurrency transactions. And it has reminded citizens that for businesses, crypto transactions are illegal. And it cracked down on mining and mining operations a long time ago and has continued to do it. That's why a lot of mining operations left China.

But it still has an effect on the price. Every time there's a new statement, even if there's not much new information in that statement, you do see the price of Bitcoin react. And that's what happened last Friday. It's funny, Adam. Often, in crypto, whenever there's any headline that's remotely negative, crypto people and Bitcoin bulls say FUD! That's just FUD. You know, Fear, Uncertainty, and Doubt. And usually, they're wrong.

But in this case with the China news, there was real FUD. They're right. And the FUD led some companies to change their operations, and it led to the price going down for a few days.

ADAM SHAPIRO: We had Anthony Pompliano on the program yesterday. Zack Guzman interviewed him about what was going on in China. I want to get your reaction to what he told us yesterday. Here is what he said.

ANTHONY POMPLIANO: Well, we should be thanking China for this action. Thank you very much. You just pushed a bunch of the mining hashrate into the United States and propelled the United States to be a leader on the global stage. Thank you very much for shooting yourself in the foot when it comes to adoption of this asset. The United States now can kind of accelerate and catch up to where China had been.

ADAM SHAPIRO: Dan, what do you think?

DAN ROBERTS: Well, he's right that China's actions have led a lot of the mining activity out of China and has had an impact on the Bitcoin blockchain's hashrate. Now that said, I think kind of the idea of China's attitude toward crypto helping spur adoption in the US has been something of a misdirection, a misframing.

You know, the idea of the digital yuan in China and, you know, if you remember when Facebook was trying to push its Libra coin, which has since been rebranded Diem, when Mark Zuckerberg and other Facebook execs were standing in front of Congress, they were trying to use the boogeyman of China to encourage regulators not to crack down on crypto in the US. You know, if you crack down and if you don't foster innovation, we'll lose to China.

But that was always kind of silly because, you know, in China, they do whatever the government tells them. And the government has basically said use this digital yuan. So there you go. I mean, it's sort of been a false comparison of we need to compete with China's crypto adoption or crypto crackdown so that we don't lose out on innovation.

You know, I don't believe that Powell and others are really watching that closely. Whether there's going to be a US Fed coin, a CBDC, he's not going to be wholly reliant on China's attitude toward crypto. But it is certainly true that years ago, six or seven years ago, a large majority of the world's Bitcoin mining activity was in Asia. Now it isn't.

ADAM SHAPIRO: Yeah, you've been speaking of shifting from China to Coinbase. You've been speaking to the C-suite folk at Decrypt to the people over there-- excuse me-- about Robinhood. You know how I get with crypto-- Robinhood-- about the wallet that is coming. And how does this play into their plans and cryptos, you know, decentralized finance future? How is this all going to play out?

DAN ROBERTS: Yeah, and first of all, Adam, you know, don't be embarrassed about confusing Robinhood with Coinbase because, of course, even though Robinhood would say otherwise, Coinbase is the big competitor. Coinbase is the company that Robinhood is going after with these heightened crypto features, although they say, oh, no, we're not competing with Coinbase per se.

But Robinhood has announced that it will add a wallet next month. And that's going to allow its customers finally to move crypto onto or off of Robinhood, which is something that crypto purists have long demanded. You know, until now, you can buy crypto on Robinhood, but Robinhood just holds it for you. You can't do anything with it other than check the price or sell it through Robinhood. Now crypto peers would also say that it's not a true wallet because it's not a non-custodial model. You don't control the keys.