Donald Trump’s presidency will force China to lift crypto ban in two years, says HashKey’s Xiao Feng

Donald Trump’s comeback to the White House is a game-changer for crypto on the global stage. In fact, if you ask Xiao Feng, chairman and CEO of HashKey Group, Trump will quite literally force China to reconsider its hardline ban on crypto in just two years.

In an interview with the South China Morning Post, he said that a crypto-friendly U.S. administration would “certainly be a driving force” for Beijing to start accepting digital currencies.

There’s a lot more to this than just Trump’s policies. Xiao says one of the real wake-up calls for China came in 2022, when the U.S. and its allies pulled Russia from SWIFT, the global financial messaging system.

This move was a heavy hit for Russia, all part of a sanctions package designed to pressure the Kremlin into pulling back from Ukraine. The message was clear: countries relying on centralized financial systems are vulnerable to the whims of foreign governments.

For China, watching the fallout from Russia’s SWIFT cut-off was a lesson in financial independence—or rather, in the lack of it. Enter decentralized finance as a possible solution. Thanks to that lesson, Xiao thinks China’s previous timeline of “five or six years” to allow crypto could now be cut down to two years or even less.

China’s tough stance on crypto

For those familiar with China’s crypto policies, this forecast is surprising. Beijing’s stance on crypto has been nothing short of ruthless. Since 2017, the Chinese government has cracked down hard on crypto trading, ICOs, mining, you name it.

The official line? Crypto poses a risk to financial stability, fuels criminal activity, and is an overall headache they’d rather avoid. This clampdown escalated in 2021 when the State Council stepped in to declare all cryptocurrency transactions illegal, effectively pushing the industry out of the country.

Miners packed up and relocated, while traders turned to underground or overseas markets to stay in the game. The restrictions have been so intense that China is now one of the few places with an outright ban on all things crypto.

Despite this, interest hasn’t faded. Xiao’s predictions are grounded in the fact that crypto demand isn’t going away anytime soon. While mainland China sticks to its ban, Hong Kong—a semi-autonomous region—has taken a different path.

The Hong Kong government has started setting up a framework to support crypto and recently approved the launch of crypto ETFs.

Given Beijing’s strict approach, Xiao Feng sees stablecoins as China’s most likely path forward. He said they are “currently the best solution for cross-border business-to-consumer trade.”

HashKey’s own research highlights the demand for this kind of payment solution. Recently, Xiao’s team conducted a survey in Yiwu, a major trade and manufacturing hub in mainland China, to gauge interest in digital payments.

The result? Nearly every merchant had been asked by foreign buyers if they could pay in U.S.-dollar stablecoins like USDT and USDC. The interest is there – the infrastructure is ready – the only thing missing is a green light from the government.

A tense crypto past, present, and future

China’s relationship with crypto is complex and spans over a decade. When Bitcoin first made headlines in 2011, the Asian giant quickly became one of the most active markets, with platforms like BTC China paving the way for the country’s crypto enthusiasts.

By 2013, major companies like Baidu and Taobao accepted Bitcoin as payment, despite the People’s Bank of China’s initial stance that Bitcoin wasn’t legal tender. The market exploded, but so did regulatory scrutiny.

Things changed dramatically in 2017 when China banned ICOs, stating that they posed too high a risk to investors. In 2021, the crackdown intensified. All domestic crypto transactions were declared illegal, mining operations were shut down, and the country effectively pushed all crypto activities into the shadows.

This crackdown drove Chinese crypto miners to set up shop in more lenient countries, creating a massive “mining exodus.” Yet, despite these efforts, an underground crypto economy persists within China, with many investors turning to over-the-counter (OTC) trading to get around restrictions.

Earlier this year, rumors circulated that Beijing might be reconsidering its stance. The speculations gained momentum after discussions at international forums, such as the G20, hinted at the potential for broader crypto adoption.

But while Bitcoin rumors were brewing, China was busy developing its own answer to the crypto craze: the digital yuan. Also known as the e-CNY, this state-backed central bank digital currency has reportedly already reached $1 trillion in facilitated transactions as of October.

Unlike Bitcoin, the digital yuan is designed to be fully controlled by the Chinese government, which fits perfectly with Beijing’s desire for centralized control.