What About China if the United States Embrace Bitcoin?

What will China do if the United States truly start selling gold to accumulate bitcoins?

Bitcoin Still Persona Non Grata in China

Although China maintains its bans on buying, trading, and mining bitcoins, the reality is not quite so harsh.

It is true that Chinese banks are banned from making bank transfers to cryptocurrency platforms. However, even though Binance, Huobi, Bitfinex, and OKX have left, a vibrant black market exists.

It is possible to obtain bitcoins for those who really want them. The same goes for mining. Certainly, most of the major miners had to pack up, but not all. Those who use excess hydroelectric power are tolerated, not to mention the small miners who disregard the ban.

Conversely, Hong Kong (a semi-autonomous Chinese jurisdiction) is much more progressive. Tax rules are clear and several firms allow the purchase of bitcoins (OSL Digital, Hash Blockchain, Bullish HK, etc.).

Institutionals therefore have solutions and several companies based in Shanghai are taking advantage. This is the case for Cango and Next Technology Holding . The latter has just announced the issuance of shares to purchase the equivalent of 500 million dollars of bitcoins.

These two companies already hold more than 11,200 bitcoins. They rank fifteenth and seventeenth worldwide, behind the American Strategy (639,000 BTC), Tesla (11,509 BTC), or the Japanese Metaplanet (21,000 BTC). The latter recently successfully raised 1.4 billion dollars to increase its bitcoin reserve.

Let’s bet that more Chinese companies will soon challenge the silence. All the more so because the Chinese government probably has regrets given what is happening in the United States.

U.S. Strategic Bitcoin Reserve

Many are like Saint Thomas, waiting for the United States to take action to believe it. Wise attitude, but there are undeniable signs.

For example, most government members own bitcoins. Donald Trump as well, as do his sons who just took the miner American Bitcoin public. Eric Trump stated this Tuesday on CNBC that bitcoin is “modern gold, the best asset of our time”.

More concretely, Michael Saylor, co-founder of Strategy, was in Washington this week to support the bill related to the strategic bitcoin reserve. He joined other industry leaders at a roundtable organized by Senator Cynthia Lummis and Representative Nick Begich.

As a reminder, the bill (Bitcoin Act) proposes that the U.S. government acquire one million bitcoins over five years. “If the United States sold their gold and bought bitcoins, they could buy 200,000 each year,” Cynthia Lummis said earlier this summer.

The roundtable aimed to devise a strategy to quickly obtain bipartisan support in both chambers. It was apparently decided that the “Bitcoin Act” will merge with the bill on cryptocurrency market structure (digital asset regulation) and the anti-CBDC bill. One legislative package that will help better push the orange pill.

Bretton Woods 2.0

It is no longer a secret, China and the BRICS in general no longer want the dollar. The war in Ukraine is largely the sharp response of the United States to this rebellion. The Russian president is indeed spearheading dedollarization, as he stated at the end of last year:

Using the dollar as a global currency brings a lot of money to the United States… The dollar allows them to exploit other economies to their advantage…

Vladimir Putin

China is not far behind. Its dollar reserves are melting like snow in the sun. Even better, Beijing has equipped itself with its own international payment system (CIPS). No need for the SWIFT network, nor the dollar. Half of its international trade is already done in yuan.

Washington must face the facts. It is time to give up the famous “exorbitant privilege” and reduce the trade deficit. This is Donald Trump’s priority, even if it means imposing customs taxes, even on his allies.

In short, the world is slowly returning to the era of the Gold Standard, when gold was in a way the international currency. Russia and China have been preparing for it for years by accumulating huge quantities of gold. They each hold 2,300 tons, equivalent to 1,200 billion dollars.

That is why Bitcoin is an interesting card to play for the United States. By selling gold to buy bitcoins, Donald Trump would kill two birds with one stone. He would weaken the Sino-Russian tango while taking first claim on the gold of the third millennium.

Vladimir Putin seems to realize the American poker move. And Xi Jinping?

Don’t miss our article: China Moves Away From the Dollar as Bitcoin Rises as an Alternative .