Investors are urged to exercise caution amid Bitcoin’s surge to nearly $64,000, reaching levels not seen in two years. In a recent advisory, Chinese state-owned media, Economic Daily, urged against cryptocurrency and emphasized the inherent risks associated with Bitcoin. Despite the recent price rebound, the publication underscored the potential pitfalls tied to the volatile digital asset.
The article highlighted the recent approval of Bitcoin Spot ETFs in the United States, reducing entry barriers for overseas investors and increasing market trading activity. However, Beijing-based lawyer Xiao Sa pointed out that overseas Bitcoin ETF dealers cannot sell related financial products to Chinese citizens, and mainland residents are barred from directly purchasing such products.
Concerns Amplified by Industry Experts
Zhao Wei, a senior researcher at OKX, voiced additional concerns within the crypto market. These include growing macroeconomic uncertainty, the potential for unforeseen industry events, and a lack of clear regulatory policies.
Bitcoin’s 50% surge this year, particularly in the past few weeks, prompted the Economic Daily’s warning. This surge coincided with a significant increase in trading volume for US-listed bitcoin funds, gaining attention on Chinese online platforms like Weibo.
China’s Persistent Stance Against Crypto
The fact that Chinese state media warns against cryptocurrency is not new. In September 2021, the Chinese government, involving 10 different agencies, declared various crypto-related activities illegal, categorizing them as illicit financial activities. The move aimed to curb the use and trading of cryptocurrencies within the country.
While the government has cracked down on crypto activities within its borders, it has not outright banned individuals from possessing digital assets like Bitcoin or Ethereum.
Binance’s Success Amid Bans
Despite China’s ban on crypto trading and the closure of domestic crypto exchanges in 2017, China paradoxically became the largest market for crypto exchange Binance last year. Users in China reportedly engaged in crypto trading totalling around $90 billion within a month in 2023, representing about 20% of Binance’s total global trading volume. At that time, over 900,000 active Binance users were believed to be in China.
China’s state media continues its persistent efforts to caution against crypto involvement, citing concerns over capital flight and financial instability. This latest warning coincides with global attention on the remarkable ascent of Bitcoin and the evolving landscape of digital assets. Investors are urged to navigate carefully in the midst of these market dynamics.
Impact of the Restriction
Chinese state-owned media, Economic Daily, recently urged against cryptocurrency amidst Bitcoin’s resurgence, shedding light on the underlying challenges and regulatory dynamics surrounding the cryptocurrency. This critical analysis aims to explore the key points raised in the article and their implications within the broader context of China’s crypto policies.
The Economic Daily’s cautionary tone towards Bitcoin is consistent with China’s persistent efforts to manage and control the rapidly evolving digital asset landscape. The warning encourages investors to remain vigilant, signaling concerns about the inherent risks associated with cryptocurrency investments.
The article draws attention to China’s comprehensive ban on all crypto trading and mining activities, implemented in September 2021. The involvement of key regulatory bodies, including the People’s Bank of China and the Supreme People’s Court, underscores the government’s commitment to curbing crypto-related financial activities. The ban explicitly deems services provided by overseas crypto exchanges to Chinese residents as illegal, reflecting the authorities’ stringent stance. Despite the ban, the Economic Daily highlights the resilience of Chinese mainland investors in finding ways to circumvent regulatory restrictions and engage in crypto trading overseas.
Also Read: Renowned Author Robert Kiyosaki Thanks Bitcoin for Challenging the U.S. Dollar.
