







As governments around the world formulate regulations for cryptocurrencies and blockchain technology, many are adopting a pro-blockchain, anti-cryptocurrency stance. No country has done this more successfully than China.





Last September, Chinese regulators shut down fiat-to-cryptocurrency exchanges and banned initial coin offerings, or ICOs, where companies issue and sell their own cryptocurrencies in a crowdsale. At the time, many in the industry worried that the ban would have an adverse effect on blockchain innovation in the country.





Fast forward one year. Though exchanges and ICOs have moved to other parts of the world, the Chinese government is making good on its plans to develop blockchain applications without crypto. The country’s central bank, the People’s Bank of China, is reportedly developing a blockchain-based digital Chinese yuan and has so far filed more than 40 patents for it. And despite the ban on ICOs, the amount of financing for blockchain-related projects in China isn’t shabby, either. According to The Brookings Institution, in January alone Chinese blockchain-related projects raised US$99 million.





“We must pay attention to blockchain -- it’s an irreversible historical trend,” stated Jia Kang, the former director of the Institute of Financial Sciences at China’s Ministry of Finance, in January. “Farsighted companies will innovate and develop blockchain according to their own business needs.” Chinese President Xi Jinping has also called blockchain a “breakthrough” technology.





Multi-billion dollar tech corporates in China are working on their own private blockchain applications, too. Just this month, Tencent, best known for its WeChat messaging app, announced a blockchain pilot project developed in partnership with the Shenzhen Municipal Tax Bureau that’s supposed to help local tax authorities track invoices and crack down on tax evasion. Ecommerce giants Alibaba and JD are also running trials for their own blockchain-based supply chain system that tracks certain products, like beef, from source to destination.





Unlike Bitcoin and Ethereum, which are public blockchain ledgers, many of these blockchain applications are private or consortium blockchains. Ledger activity is not openly accessible or viewable, and only certain organizations can participate in transaction verification.





This makes them less distributed than public ledgers, but it also makes sense for certain business use cases, like those that require transactions to be linked with identities (Bitcoin transactions are pseudonymous). Private and consortium blockchains also don’t need tokens to run -- typically an incentive for transaction verification in public ledgers -- which makes them more palatable for Chinese regulators. And while China hasn’t been able to shut down Bitcoin entirely, both companies and regulators would have more control over consortium and private blockchains.





Other countries are following in China’s footsteps. On Sunday, Saudi Arabian regulators released a statement, warning investors that virtual currencies, like Bitcoin, are “illegal in the kingdom and no parties or individuals are licensed for such practices.”





Other countries, especially those that see cryptocurrency as a threat to their national currencies, are also cracking down on crypto. In Venezuela, where inflation of the Venezuelan bolivar is expected to hit 1 million percent by the end of the year, the government has banned imports of crypto mining equipment. Indian regulators have also taken a “blockchain good, crypto bad” attitude. In April, India’s central bank, the Reserve Bank of India, issued a directive to financial institutions and banks, instructing them to “not deal with or provide services to any individual or business entities dealing with or settling” cryptocurrencies.





Though it’s too early to tell whether China’s crackdown on crypto will take a toll on its blockchain aspirations, for now, at least, the country’s regulators have proven the two to be very much separable.







