The People's Republic of China is not shy about letting the entire world know of the country's intention to become a global leader in blockchain technology development. At the same time, however, Chinese laws and regulations are not very welcoming of traditional cryptocurrencies such as Bitcoin, Ethereum, Ripple, and others. According to Xiao Gang, an economist who used to be in charge of the top securities regulatory agency in China, there is a clear need to reform current laws for the purpose of establishing financial leadership, and this would include being more open to the cryptocurrency market.

No other government has invested as much as China in terms of supporting blockchain development and innovation; in fact, the country is on track to complete a project that would create a digital version of the yuan, thus making it the first major digital sovereign currency to enter global circulation. Despite all these developments, the use of Bitcoin and other cryptocurrencies is prohibited in in China. The prohibition is not limited to trading; it extends to all transactions and even possessing tokens.

At the China Finance 40 Forum recently held in Pushan, Xiao Gang mentioned that cryptocurrency exchanges are here to stay, and China will need to figure out how to deal with them because they are part of an organizational change of finance at a global level. China wants to be at the top of the nascent digital capital markets, but the current stance on cryptocurrencies will not help in this regard. Xiao Gang listed a few principles that China will have to take into consideration in order to become a capital markets leader in the 21st century: fairness, inclusiveness, and a spirit of collaboration.

Thus far, the Communist Party of China has shown a desire to control blockchain networks as much as possible. The idea of a decentralized monetary system is not what China has in mind; financial regulators are all for digital currencies, but only if they can control them. As China continues to expand its blockchain development ambitions, officials will likely realize that there is only so much they can reasonably control.