As you will probably be aware, the Chinese government is no fan of cryptocurrency, having banned initial coin offerings in September of this year, and also closing all of the major Chinese exchanges. This means that the excitement around Bitcoin has totally passed the Chinese market by. However, that didn’t stop a Chinese tech company, Xunlei, designing a cryptocurrency of its own.

OneCoin, even though it’s unavailable for trade at any of the major marketplaces, has had dramatic jumps in value since its launch in mid-October, and at one point was registering 80 times its initial value. None of this has harmed Xunlei’s profile, making them the a consistently high-performing Nasdaq stock.

However, all isn’t rosy; a less than happy business partner of Xunlei has accused OneCoin of being precisely what is banned – an initial coin offering. There is, therefore, a real possibility that the government will step in and ban OneCoin before it has really got off the ground.

The cryptocurrency does fit, however, with the slight ‘dark web’ associations that digital payment forms still have. Xunlei started life as a torrent downloader (think a kind of Chinese answer to Pirate Bay), and went legit in 2014, going public on the Nasdaq exchange after cleaning up its act and removing pirated material on its platforms. In August 2017, it launched a hardware product called OneCloud – a blockchain-based storage device suitable for multiple users which also fulfilled the function of a mining machine. By allowing Xunlei to use their idle bandwidth, users earn OneCoin as a reward which they can then use to buy Xunlei services. Xunlei are also keeping their cryptocurrency rather more under wraps than other forms such as Ethereum; the code is private, even though it’s based on the same network.

The focus would appear to be on shared computing and cloud storage rather than digital currency or making money, but the appeal of big gains on cryptocurrency in light of Bitcoin’s phenomenal success this year is obviously attracting people for that reason too. There’s also evidence to suggest that it’s on the way to holding the same status as Bitcoin in China, i.e. quite legal, but with restricted trading. Even though OneCoin is technically not an ICO, Xunlei have also been accused of “playing around in the grey area” by Xiao, the Chinese Bitcoin analyst. Although no money was raised specifically through or by OneCoin, if trading on third-party exchanges gains popularity, that effectively forms a securitised asset – something that is not permitted without government approval.

With a name change to Lianke – and the wallet app changing its name to Lianke Pocket – all users have had to register with their real names during December 2017; a real attempt to legitimise the cryptocurrency, especially when viewed with the crackdown on illegal trading platforms.

China is an interesting and developing market for cryptocurrency, and it’s still difficult to predict how the government will eventually permit – or otherwise – enthusiasts to trade and hold coins. Watch this space in 2018.