China warns against cryptocurrency investments
China warns against cryptocurrency investments
Amid Bitcoin's impressive rise, conquering the $64,000 level, Chinese authorities have sent signals to investors warning against cryptocurrency transactions and Bitcoin investments.
Chinese state media on Sunday appealed to the public, saying that the rising price of the major cryptocurrency and its spectacular success do not eliminate the risks associated with the digital asset, according to Cryptonews.
According to their information, investors are better off remaining cautious about Bitcoin and products tied to cryptocurrencies due to the continued high risks.
Economic Daily cited data showing that the approval of US spot Bitcoin ETFs has significantly lowered the entry limit for foreign investors, which has led to an increase in trading activity in the market and an increase in its total capitalization.
It should be noted that foreign Bitcoin ETF providers are not allowed to sell cryptocurrency products to Chinese investors. It is also worth noting that it is prohibited to buy cryptocurrency and related financial products in mainland China.
The warning comes amid ongoing concerns by Chinese authorities about the risks of cryptocurrencies and the government's policy of banning all cryptocurrency activities: exchanging, trading, and mining.
Zhao Wei, a senior researcher at OKX exchange, who was quoted by the publication, also spoke about other problems in the cryptocurrency market. Digital assets are subject to the complexity of industry regulation, increasing macroeconomic uncertainty, and unforeseen developments in the crypto industry.
Chinese authorities have noted the increased attention to cryptocurrencies amid the impressive rise of bitcoin to $64,000, close to its all-time high. It is noted that the main growth came after the approval of spot Bitcoin ETFs and a significant increase in trading volume in the United States for the new crypto product.
Bitcoin has become a major topic of discussion on many Chinese online platforms, especially the microblogging portal Weibo.
China has been doing its best to caution investors against cryptocurrency activities, warning them of the threat of capital loss and financial instability.
The most significant step to ban cryptocurrencies was taken by the Chinese government in September 2021. At that time, any activity related to cryptocurrency was declared illegal. The move was aimed at restricting the use and trading of cryptocurrencies within the country.
Currently, Chinese citizens are taking advantage of some workaround opportunities. Since such activities are not possible within the country and you cannot buy Bitcoin or Efirium, Chinese citizens often buy cryptocurrencies through Hong Kong companies. There are shops where you can buy cryptocurrency, and they are located in the tourist spots of the city.
Interestingly, despite the ban on cryptocurrency trading, China paradoxically became the largest market for cryptocurrency exchange Binance last year, whose users bought $90 billion worth of cryptocurrency within a month.
This volume represents 20% of Binance's total global trading volume. There are over 900,000 active Binance users in China.
Also read: Cryptocurrency market capitalization has exceeded $2.5 trillion
