The continuous devaluation of the Yuan has increased demand for bitcoin and new asset classes in China. Today, the country counts some 2 million bitcoin users; among them, 80 percent are speculating for short-term profit and about 14 percent are holding long-term, recognizing the value of the digital currency, according to Fang Yu, COO and Co-Founder of BitKan.
Speaking at the laBITconf conference in Buenos Aires earlier this week, Yu pointed out China's appetite for bitcoin and other digital currencies and noted the craze for blockchain technology within both the private and public sectors.
"Big banks and financial institutions, even the government, are taking part in the research of [blockchain technology]," Yu told the audience. "They all consider [the blockchain] as a big chance for disruption. Even some banks have already set up their in-house research department for this."
In October, China's Ministry of Industry and Information Technology issued a whitepaper that explored various applications of blockchain and advocated the development of China's blockchain industry.
The release coincided with a forum on blockchain hosted by the government aimed at encouraging cooperation among industry stakeholders.
Blockchain initiatives have multiplied in recent months with the launch of the ChinaLedger Alliance and a three-way strategic coalition between the Chinese government, ChinaLedger and the Shenzhen Consortium earlier this year.
During International Blockchain Week in Shanghai this September, enterprise blockchain platform developer BlockApps signed key partnerships in China: with Minsheng Life Insurance for an employee appreciation pilot program, as well as pilot production systems for Wanxiang Smart City and Qianhai Smart City.
"Since the beginning of the year, blockchain has become a hot topic in China," Yu said. "More Bitcoin companies 'transformed' and set up tech companies around blockchain technology. The bitcoin price surge this year is an indication of the new value in the industry.
"The heat is not only at home. We see China taking three seats in the global top 10 blockchain VCs, though the companies they are investing in are mostly overseas."
Wanxiang Blockchain Labs, the Chinese auto giant’s blockchain research institution, is dedicating a $50 million fund to blockchain technology; ShuBei Ventures, the biggest blockchain investment fund in the world, has already invested 180 million RMB (US$26.6 million) of its 600 million RMB (US$88.8 million) fund; and IDG Ventures has invested in the likes of Ripple, Coinbase, Circle and Koinify.
Back in December 2013, the Chinese government's decision to not consider bitcoin as a legal tender caused the closure of a number of bitcoin-related payment businesses, leading to what Yu refers to as "the Bitcoin winter in China."
A new civil law proposed in June 2016, suggests that China has drifted away from its wait-and-see approach towards bitcoin and digital currencies, unveiling a clear positioning as the government looks to legally consider these as "virtual commodities" that people can own and trade freely.
With a massive 700 million internet user pool, a 92 percent smartphone penetration rate and a government supportive to startups, China has been quick to emerge as a leader in bitcoin mining and trading. Today, the country hosts some of the industry's top players — including Bitmain, the world's largest bitcoin-mining machine manufacturer, and top exchange platforms OKCoin and Huobi.
Shenzhen-based BitKan offers Bitcoin-related tools and services such as aggregated news, mining monitoring and price alerts. After raising $1.6 million in a Series A funding round from Bitmain, the company introduced over-the-counter (OTC) trading. BitKan is now exploring other Bitcoin applications, including remittances and micropayments, and plans to expand to the U.S.