China seems to be softening its hardline stance against bitcoin, says crypto services CEO

Key Points
  • China seems to be backing off its stance against bitcoin and other cryptocurrencies, says serial internet entrepreneur Jeremy Allaire.
  • New developments there come at a time when investors are flocking to bitcoin as the U.S.-China trade war continues.
  • Bitcoin, which has been rallying in 2019, climbed to more than $11,000 on Monday after China allowed its currency to slide.
Circle CEO Jeremy Allaire explains the overnight surge in Bitcoin
Circle CEO Jeremy Allaire explains the overnight surge in Bitcoin

China seems to be backing off its hardline stance against cryptocurrencies, a serial internet entrepreneur told CNBC on Monday.

"We have been seeing, from my vantage point, a softening in the Chinese stance towards crypto," said Jeremy Allaire, co-founder and CEO of crypto financial services firm Circle. He founded and formerly served as CEO of video streaming provider Brightcove. He was also a technologist at General Catalyst, a Cambridge-based venture firm.

The Chinese government in 2017 started to ban initial bitcoin offerings and shut cryptocurrency trading exchanges.

But as global interest in crypto rises, and large names, like Facebook, are backing their own digital coins, China may be looking to join the movement.

In mid-July, a Chinese court legally recognized bitcoin as digital property. Shortly after that, the state-owned Bank of China started marketing about bitcoin and cryptocurrencies.

"There is a lot of Chinese national participation in this market," Allaire said, referring to bitcoin. "There are many large offshore exchanges," he added, which people are using to bet on the industry.

Digital coins are starting to be viewed as an attractive hedge in times of economic upheaval.

Bitcoin, which has rocketed about 200% higher in 2019, soared as much as 9% on Monday to over $11,000 as weekend uncertainty between China and the United States rattled global stock markets.

President Donald Trump last week announced that the U.S. would impose a 10% tariff on an additional $300 billion of Chinese imports starting Sept. 1.

On Monday, China retaliated by allowing its currency to slide to its lowest level in more than a decade.

However, it's worth noting that cryptocurrencies have been highly volatile in recent years, with bitcoin swinging from all-time highs above $19,000 in December 2017 to recent lows around $3,200 a year later.