Bitcoin's Status in China Amid Chinese Government Crypto Warning

The Chinese government, through its state-sponsored media agency, Economic Daily, has once again cautioned against investing in cryptocurrencies despite the current bullish market conditions. This warning comes despite China’s purported ban on crypto trading and mining implemented in 2021.

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Despite the ban, China continues to be one of the largest digital asset markets globally. This raises questions about the actual status of cryptocurrency in China and whether it is genuinely banned.

Chinese State Media Issues Caution Amid Bitcoin Surge

Coinciding with the remarkable surge in Bitcoin’s price, Chinese state media has issued a cautionary advisory to cryptocurrency investors, urging them to exercise caution. Despite the Chinese government’s sweeping bans on various crypto-related activities in 2021, which effectively made cryptocurrency illegal in the country, possession and peer-to-peer trading of digital assets like Bitcoin and Ethereum were not explicitly banned, allowing crypto activity to persist.

With BTC above $52K, I am increasingly concerned that Beijing’s 2021 decision to ban crypto mining may go down in history as one of the biggest failures of industrial policy. Especially if the US policy unorthodoxy and weakening Fed independence one day de-anchors the dollar. pic.twitter.com/7e36sS8p5C

— Shanghai Macro Strategist (@ShanghaiMacro) February 15, 2024

The advisory highlights the risks associated with the volatile nature of cryptocurrency prices, macroeconomic uncertainty, unclear regulations, and other factors such as hacks and cybersecurity breaches. Given these ongoing concerns, investors are advised to maintain a clear-headed approach when dealing with cryptocurrencies.

Concerns Over Bitcoin ETF Approval in the US

The approval of spot Bitcoin exchange-traded funds (ETFs) in the United States has raised concerns about the potential accessibility of this new publicly traded product to residents in mainland China. Xiao Sa, a partner at Beijing Dacheng Law Firm and a director of the Bank of China Law Research Association, seeks to address these concerns by emphasizing that the approval of Bitcoin ETFs does not guarantee significant progress for cryptocurrencies in the short term.

Sa points out that China effectively banned all cryptocurrency activity in 2021, prohibiting the sale of such products to Chinese residents. Despite this regulatory stance, cryptocurrency activity remains significant in China, raising questions about the underlying motivations behind the recent advisory.

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