China’s state-run media has issued fresh warnings to investors about the risks of cryptocurrency investments, coinciding with Bitcoin’s recent surge to a two-year high, approaching the $64,000 mark. The Economic Daily, a government newspaper, highlighted the inherent dangers tied to the digital currency, despite its price rebound. The publication stressed the importance of investor caution towards Bitcoin and other cryptocurrency-linked products, citing the volatile and unpredictable nature of these digital assets.
Regulation concerns
The newspaper referenced statements from Xiao Sa, a lawyer based in Beijing, who brought attention to the United States’ approval of Bitcoin Spot Exchange-Traded Funds (ETFs). This approval has made it easier for overseas investors to engage in the market, potentially increasing trading activity. However, Xiao Sa pointed out that these ETFs are not accessible to Chinese citizens, emphasizing the strict regulations that prevent mainland residents from directly purchasing such financial products.
Additionally, the Economic Daily quoted Zhao Wei, a senior researcher at OKX, who voiced concerns over the broader crypto market’s challenges. These include rising macroeconomic uncertainties, the potential for unexpected industry events, and unclear regulatory policies.
This warning follows a significant increase in Bitcoin’s value, which has risen by 50% this year, with a notable spike in trading volume for US-listed bitcoin funds. Despite the Chinese government’s stringent stance against cryptocurrency trading and related activities, reflected in the comprehensive ban enacted in September 2021, interest in digital currencies remains high. The ban targeted various crypto-related practices, aiming to limit their use and trading within the country, yet stopped short of prohibiting the possession of digital assets like Bitcoin or Ethereum.
In an interesting contrast, Binance, a leading crypto exchange, has reported substantial trading volumes from its Chinese user base, indicating a continued interest and engagement with cryptocurrencies in China despite regulatory hurdles.