In a move that perfectly encapsulates the Chinese authorities’ somewhat conflicted relationship with digital assets, it’s been revealed that the Shenzhen Special Economic Zone will look to open its doors to crypto companies and aid their research.
The ‘One Country, Two Systems’ concept that will drive the zone’s mission to serve as an example of progressive Chinese economic reform – which Google Translate somewhat artfully Anglicises as “socialism with Chinese characteristics” – seems to extend well beyond the project and into the State’s handling of crypto in general.
To wit, the country forbids any and all trading of Bitcoin or similar digital assets by its citizens, whilst simultaneously seeking to develop and launch its own. The central bank issued digital currency, colloquially known as the ‘Digital Yuan’, has apparently been in development under the auspices of the People’s Bank of China for some five years project, but could well be a wolf in crypto’s clothing.
— CryptoGlobe (@CryptoGlobeInfo) August 12, 2019
The Shenzen zone has been featured in the news recently due to its proximity to the ongoing social unrest in Hong Kong, and has long acted as a buffer between the Chinese mainland and the more liberal principality.
Now that role is apparently being codified in a way that allows political and economic reforms there to serve as an example of the State’s vision for modern China, and bridging the gap between socialist ideology and the Western business practicies. The South China Morning Post also posits that the new policy could serve to reduce Hong Kong's influence and stature in the region.
Nevertheless, part of the plan will allow for Shenzen to “vigorously develop strategic emerging industries”, including support for “innovative applications such as digital currency research and mobile payment”, as a way of promoting interoperability with Hong Kong and Macao’s financial markets. In the light of the State’s broader policies, which seek to promote the incumbent financial system by outlawing options such as Bitcoin, it is unclear exactly what form this research will be allowed to take.
Bitcoin has regularly been cast as a safe haven for those looking to secure their assets during the recent problems in Hong Kong, with a noted premium being seen in the BTC price on sites like Local Bitcoins.