China’s leader, a fan of centralized power, is suddenly the darling of the crypto community

Unlikely allies.
Unlikely allies.
Image: AP Photo/Mark Schiefelbein
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The global crypto community is suddenly full of nice things to say about Xi Jinping, the Chinese president who almost epitomizes the notion of centralized power.

Last Thursday (Oct. 24), Xi delivered a speech about the importance of blockchain and the need to accelerate the development of the technology in China in a wide range of sectors, during a “study session” for some of the Chinese Communist Party’s most senior members. Xi added that as governments worldwide have stepped up their efforts in developing blockchain, China should follow suit and allow the country to have greater say in forming global standards for the technology, according to a transcript (link in Chinese) published by state news outlet Xinhua.

Xi’s proclamations came despite his government’s ban on crypto currencies that has been effect since 2017, out of fears that the speculation of the digital currencies would cause chaos in its financial markets. Blockchain technology has also been used to fight Chinese censorship. Nonetheless, the global crypto community was quick to welcome Xi’s comments. Some, for example, juxtaposed Xi against US president Donald Trump—who is no fan of virtual currencies—saying the US should catch up with China in this regard (though there was no explicit mention of virtual currencies in Xi’s speech). Bitcoin has surged some 30% since the publication of Xi’s speech.

The Chinese president’s remarks were the “right response from a superpower to any promising technology,” tweeted Gabor Gurbacs, director of digital assets strategy at investment firm VanEck, which once planned to roll out a bitcoin-linked exchange-traded fund. “I wish the United States took a similar supportive approach.”

Misha Lederman, head of communications for crypto currency Beatzcoin, said the main beneficiaries from Xi’s statement include blockchain players outside of China. “When will the US wake up?” he asked in a tweet.

Xi’s speech has also seemingly reignited interest in blockchain in China, with some of the country’s top universities rolling out courses relating to blockchain overnight following his remarks. Some “massive blockchain initiatives” from local governments are also expected, according to Dovey Wan, a founding partner of Primitive Ventures, which invests in blockchain and related technologies. Today (Oct. 28), more than 110 Chinese companies (link in Chinese) whose business are connected to blockchain soared by their daily limit of 10% on the country’s stock exchanges.

However, China’s vision of developing blockchain could be very different to that of your typical crypto enthusiast, in line with Beijing’s guiding strategy of pursuing advancements in cutting edge technologies while maintaining tight control. Zhang Ye, head of the technology unit at China’s Securities Regulatory Commission, told Chinese media last year that blockchain advocates for absolute decentralization have “no solid ground” and that the technology is better served if it’s built on centralized infrastructure. Zhang’s idea of blockchain development is also similar to Beijing’s blueprint for a centrally controlled, digital version of the yuan.