Crypto Investors ‘Should Thank China For This’, Says Anthony Pompliano

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Without wasting any time, crypto bulls are already seeing the Chinese government’s ban from crypto trading last week as a boon to the emerging sector. Speaking at Yahoo Finance’s Crypto Investing Summit this week, investor and podcaster Anthony Pompliano echoed the sentiment of many longtime investors in the asset class.

The Chinese government has banned cryptocurrency activity at least 5 different times before last week, with this most recent action making crypto trading or offering crypto-related services to Chinese citizens a financial crime. (Here is the official statement from Chinese regulators.) Since the announcement, reports indicate that an exodus like the one that happened to the country’s crypto mining companies in May is now underway for crypto companies in violation of the law. .

Two of the world’s largest cryptocurrency exchanges, Binance and Huobi, both halted registrations of new China-based clients over the weekend.

But Pompliano sees the crackdown as a positive development, not only for the crypto industry but also for the US economy.

“It’s the most American technology we have today, similar to the Internet,” Pompliano told Yahoo Finance. “China is making a huge geopolitical mistake here. Now it’s up to the United States to decide … If anyone is to benefit from this technology, we better make sure it’s us.”

After going from $ 45,000 in the news to just under $ 41,000, bitcoin is now hovering above $ 42,000 and other major cryptocurrencies are showing signs of recovery. Bitcoin (BTC-USD), Ethereum (ETH-USD), Binance’s BNB exchange coin and Solana (SOL1-USD) all show improvement over the past 24 hours, while Cardano (ADA-USD) and Ripple remain in the red.

Admittedly, all these assets were sold at the beginning of the week. It is wrong to assume that the crypto industry will not see a reflection on prices due to the loss of Chinese customers.

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Crypto trading on the decline in East Asia

In light of these concerns, however, geographic data from blockchain analytics firm, Chainalysis, indicates that East Asia, a region dominated by China, has already seen a decline in its growth. crypto trading compared to other parts of the world.

Over the past year, the global crypto transaction volume in North America and part of Europe has overtaken East Asia, a region that generated the majority of crypto volume in the previous year. Between January 2020 and July 2021, East Asia’s share of the global transaction volume increased from 31% to 14%. Although the gross volume of this region increased further, it happened at a much slower rate than the previous year compared to other parts of the world.

Despite China’s previous regulatory bans, many investors were concerned about how the country might use crypto to their advantage. For example, China previously dominated both the operations and manufacturing of the crypto mining industry to such an extent that some feared the nation would one day take majority control of the Bitcoin network.

As recently as April of this year, PayPal co-founder billionaire Peter Thiel also expressed concern about how the government could use Bitcoin to manipulate global monetary policy. “I wonder if at this point bitcoin should also be viewed in part as a Chinese financial weapon against the United States,” he said.

For investors who might have shared Thiel’s opinion, this latest move, which followed a similar crackdown targeting crypto mining in China, could be interpreted as a good thing. Despite short-term price volatility, the outright criminalization of crypto in China could allay such fears, at least for cryptocurrency advocates.

Now, by harnessing crypto to make way for the country’s digital yuan, a central bank digital cryptocurrency (CBDC), the country appears poised to push its monetary policy through the digital yuan. Crypto investors like Pompliano believe this effort could improve the value of decentralized cryptocurrencies like bitcoin.

Photo by: STRF / STAR MAX / IPx 2021 09/24/21 China’s central bank says all cryptocurrency-related activities are now illegal and promises harsh crackdown on violators.

“We should thank China for this action,” Pompliano said, referring to how China’s crypto mining sector had dominated the industry. “The United States can now step up and catch up with China. “

Regulations to come

Nonetheless, Pompliano’s bullish outlook carries great optimism about how cryptocurrencies will be satisfied by US regulators. After a month of testimony in Congress and heated debate on Twitter, U.S. regulators are showing little sign of changing what continues to look like a tougher stance on crypto assets than the country had previously exposed. Some crypto natives even dramatize it as a “war on crypto”.

While there was no discussion of outright criminalization of the asset class, the US Treasury Department, Federal Reserve, Securities Exchange Commission, and Congress have all signaled their desire to more tightly regulate certain parts. of the asset class. Many U.S. officials, crypto supporters and non-advocates alike agree that regulation remains opaque by relying on much older laws that work inefficiently for the faster segment of the financial industry.

On September 28, the Commodities and Futures Trading Commission (CFTC) revealed a $ 1.25 million fine to cryptocurrency exchange Kraken for illegally offering commodity trades with margin in digital assets to investors. Americans. The exchange paid the fine to regulators and expressed willingness to work with regulators despite a report from Coindesk indicating that there may have been questions as to whether the exchange could comply with the law on l ‘recording as is.

David Hollerith is a senior journalist covering cryptocurrency and the stock markets.

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