As the price of bitcoin drops back down to $8,300 level for the first time since October 25th, the Chair of the Shenzhen’s HDFH, which stands for the Hande Financial Technology Holdings, has made an announcement at the today’s second China International Import Expo event.
What he had to say in his speech is that a fund for building a digital bank consortium blockchain has been launched, fund that is based on the experience investors have accumulated in fintech. He added that the first step to invest and to turn a bank digital has to be made, whereas the second step is the building of the consortium blockchain, a consortium that needs to have the digital bank as a main node.
Yillion Bank and ZVCA Involved in the Launch
Yilion Bank is one of the four internet Chinese banks. It has received permission to be involved in online credit business, together with Zhongguancun Private Equity and Venture Capital Association, or ZVCA. The fund is meant to work with both international investors, to be at about $1 billion and to have an investment phase of 6 years. Its exit phase should be 2 years.
This is what CAO Tong, the HDFH’s chair had to say:
“The fund empowers the targets through investment and fintech transformation, while building an innovative global digital bank consortium blockchain, achieving broader value for the participating digital banks.”
The news comes after President Xi Jinping has endorsed the blockchain last month.
CBDC to be Launched
The announcement Tong has made comes now, when the People’s Bank of China (PBoC) is working to release a central bank digital currency (CBDC). PBoC has made earlier in August the announcement that it has been working for 5 years to develop a CBDC.
Yi Yang, the bank’s governor has said that the launch date hasn’t yet been set. However, Jack Lee, the co-founder and partner at HCM Capital, has stated last month that he expects China to launch a CBDC in the next 2 or 3 months.
Is the China Narrative Running out of Steam?
In our last update, we covered the rapidly developing China narrative as that country’s president, Xi Jinping, favorably spoke about blockchain.
Since then, the market appears to have cooled. Jinping’s statements, which made clear that China is bullish on blockchain technology, didn’t mention any projects by name, nor did he speak about decentralization.
Despite that, coins with ties to China saw impressive gains. NEO, ONT, and QTUM were amongst those who experienced bull market-like increases but have since tapered off.
Were Jinping’s statements nothing but a dream, or is there more where that came from?
China is likely kicking off a blockchain arms race
In an interview with Cointelegraph yesterday, Binance boss Changpeng Zhao said of China’s new stance toward blockchain:
It’s super positive. China’s very pro-technology, so China will invest very heavily in blockchain technology and on the educational front as well. Given that China has now made that move, every other country in the world will have no choice but to follow or move faster. But it’s going to be pretty hard to move faster than China to be honest.
In other words, when China decides to go for it, you’ll be hard-pressed to keep up. The United States and most members of the EU have expressed interest in blockchain technology, but have avoided taking key positions or signaling clear intent to adopt across industries.
Thus far, the private sector has explored blockchain with positive results, but no nation except China, Singapore, and to some extent, Russia has reflected that. However, due to China’s position as the world’s second greatest superpower, their sudden claim to what is likely the greatest incoming tech revolution since the internet is sure to pull others, like the USA, into the ring.
Digital yuan positioning itself as a global currency
Facebook’s Libra project was the first blockchain-based currency to be taken seriously as a global form of money. Owing to that, states around the world felt genuinely threatened by it and have largely blocked the project from advancing.
China, on the other hand, is a sovereign nation. To that end, it is free to pursue the creation of a digital currency for not only national purposes but global ones as well.
In September, Circle’s Jeremy Allaire told CNBC that the digital yuan’s two-tier issuance system was a smart move for breaking the yuan out onto the world stage.
“This becomes a mechanism by which (the yuan) can be used in everyday transactions all around the world,” added Allaire, an internet entrepreneur who also founded video streaming firm Brightcove. “It’s ultimately a foundation for the internationalization” of the yuan.
Can the digital yuan challenge bitcoin for crypto supremacy? The PBOC, China’s central bank, already showed its hand in regard to how it views BTC when bitcoin trading in China was banned back in 2017. Clearly, government officials see bitcoin as a threat to financial policy and would be more than happy to coax it into submission with the crypto yuan.
China’s foray into blockchain simply can’t be ignored, regardless of how quickly the market forgets essential news. While the outcome of these events may not be immediately bullish for the market as a whole, the stage is being set for a significant increase in awareness for blockchain technology.