China advises investors to steer clear of Bitcoin (BTC) despite enduring prohibition
China’s state-run newspaper has issued an important advisory to investors, urging caution in light of Bitcoin’s recent surge to a two-year high of over $65,000. This warning comes against the backdrop of ongoing regulatory concerns and a rapidly evolving global crypto landscape.
China has long been cracking down on cryptocurrencies, with the government declaring various crypto-related activities illegal in September 2021. While this move aimed to curb specific actions, it did not outright prohibit the ownership of digital assets like Bitcoin or Ethereum. However, concerns about capital flight and financial instability persist, leading to continued warnings from state media.
The recent advisory coincides with a significant increase in Bitcoin’s value this year, accompanied by heightened trading volumes for US-listed Bitcoin exchange-traded funds (ETFs) and other similar instruments. This cautionary note highlights the macroeconomic uncertainty, unforeseen events in the industry, and unclear regulatory policies as factors that necessitate investor caution.
The 2023 Annual Conference of the Chinese Association for the Study of Integrity and Law has shed light on the rise of corruption and criminal activities linked to cryptocurrencies. Legal experts have discussed the challenges of monitoring sophisticated corruption facilitated by digital currencies. The association has highlighted the digital space as a means of evading traditional surveillance, raising concerns.
In an effort to further crack down on cryptocurrencies, China is focusing on addressing illegal foreign exchange trading involving USDT. Despite official bans on crypto trading and mining, the industry remains popular. The Supreme People’s Procuratorate and State Administration of Foreign Exchange are emphasizing criminal cases involving USDT and the need for coordinated efforts to combat fraudulent foreign exchange activities.
China’s Supreme People’s Procuratorate has pledged to punish criminals exploiting blockchain technology and metaverse projects for illicit activities. The increase in cybercrime in blockchains and the metaverse calls for citizens and participants in the digital asset market to adapt to new crime-fighting tactics.
To regulate crypto transactions, China is planning to revise its existing anti-money laundering rules. The guidelines aim to implement more effective mechanisms for monitoring and supervising the crypto industry. This is the first major review in 17 years, highlighting the need for oversight and regulation in this dynamic Web3 environment.
While China faces regulatory challenges, the U.S. is witnessing a significant development with the recent approval of a spot Bitcoin Exchange-Traded Fund (ETF). This approval has led to a surge in interest and participation in cryptocurrency markets. The Securities and Exchange Commission (SEC) offers retail investors an indirect way into the Bitcoin market within its regulatory framework through the spot Bitcoin ETF. This has expanded investment opportunities and significantly increased ETF trading volume.
This increased liquidity has contributed to a substantial rise in the price of Bitcoin, marking a notable shift in the dynamics of the cryptocurrency market.
In contrast to mainland China’s strict approach to crypto regulation, Hong Kong is actively working to establish robust and favorable crypto regulations. Hong Kong’s Secretary for Financial Services and the Treasury, Christopher Hui, emphasizes the “same activity, same risk, same regulation” principle and has introduced a licensing regime for virtual asset service providers (VASPs). Existing VASPs have been given a transitional period to adapt to the new licensing system. Hong Kong aims to enhance investor protection and combat financial crimes in the crypto space.
However, Hong Kong has faced challenges with crypto adoption, with a significant increase in virtual asset-related crimes over the past three years. According to a local media report, there have been 3,415 cases of crypto-related crimes totaling billions in Hong Kong dollars.
In a resounding mandate, El Salvador has re-elected Nayib Bukele, the president known for his pro-Bitcoin stance and strong crime-fighting initiatives. Bukele’s victory, with over 85% of the vote and at least 58 out of 60 assembly seats secured, highlights significant legislative support. El Salvador’s unique approach to Bitcoin adoption includes a citizenship program that offers expedited naturalization in exchange for Bitcoin donations, which strengthens the nation’s treasury.
Currently, El Salvador holds 2,381 Bitcoins, acquired at an average cost of $44,292, with current valuations indicating a substantial increase in investment value. This strategic accumulation aligns with El Salvador’s commitment to the cryptocurrency, as demonstrated by the Nayib Bukele Portfolio Tracker, an online tool that provides real-time insights into the country’s Bitcoin holdings and their cost basis, offering unprecedented transparency into El Salvador’s pioneering fiscal strategy.
