Chinese State Media Sounds Caution: Warns Against Cryptocurrency Amidst Market Surge – TechStory

Investors are urged to exercise caution amid Bitcoin's rise to nearly $64,000, reaching levels not seen in two years. In a recent advisory, Chinese state media Economic Daily urged against cryptocurrencies and emphasized the inherent risks associated with Bitcoin. Despite the recent price rally, the publication underlined the potential dangers related to the volatile digital asset.

The article highlighted the recent approval of Bitcoin spot ETFs in the United States, lowering barriers to entry for foreign investors and increasing trading activity in the market. However, Beijing-based lawyer Xiao Sa noted that foreign Bitcoin ETF distributors cannot sell related financial products to Chinese citizens, and mainland residents are prohibited from directly purchasing such products.

Concerns amplified by industry experts

Zhao Wei, senior researcher at OKX, expressed additional concerns within the cryptocurrency market. These include increasing macroeconomic uncertainty, the possibility of unforeseen industrial developments and the lack of clear regulatory policies.

Bitcoin's 50% rise this year, particularly in recent weeks, prompted the Economic Daily warning. This increase coincided with a significant increase in the trading volume of US-listed bitcoin funds, attracting attention on Chinese online platforms such as Weibo.

China's persistent stance against cryptocurrencies

Chinese state media warning against cryptocurrencies is not new. In September 2021, the Chinese government, involving 10 different agencies, declared various cryptocurrency-related activities illegal, categorizing them as illicit financial activities. The measure was aimed at curbing 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 people from owning digital assets like Bitcoin or Ethereum.

Binance's success amid bans

Despite China's ban on cryptocurrency trading and the closure of domestic cryptocurrency exchanges in 2017, China paradoxically became the largest market for cryptocurrency exchange Binance last year. Users in China reportedly engaged in cryptocurrency trading totaling around $90 billion in one month in 2023, accounting for approximately 20% of Binance's total global trading volume. At the time, more than 900,000 active Binance users were believed to be in China.

China's state media continues its persistent efforts to warn against cryptocurrency involvement, citing concerns over capital flight and financial instability. This latest warning coincides with global attention on the remarkable rise of Bitcoin and the changing landscape of digital assets. Investors are urged to navigate cautiously amid these market dynamics.

Impact of the restriction

Chinese state media Economic Daily recently urged against cryptocurrencies amid the Bitcoin 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 toward 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, indicating concerns about the inherent risks associated with cryptocurrency investments.

The article draws attention to China's complete ban on all cryptocurrency mining and trading activities, implemented in September 2021. The involvement of key regulatory bodies, including the People's Bank of China and the Supreme People's Court, underlines the commitment of the government to curb cryptocurrency-related finances. activities. The ban explicitly deems services provided by overseas crypto exchanges to Chinese residents illegal, reflecting the authorities' strict stance. Despite the ban, the Economic Daily highlights the resilience of mainland Chinese investors in finding ways to bypass regulatory restrictions and engage in cryptocurrency trading abroad.

Also read: Renowned author Robert Kiyosaki thanks Bitcoin for challenging the US dollar.

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