Cryptocurrency as an Investment Tool in China

The newly-appointed Governor of PBoC seems to be taking a more crypto-friendly stance than his predecessor. Li, one of seven deputies to PBoC governor Yi Gang and former vice mayor of the Chinese municipality of Chongqing, is seemingly taking a stronger position for the central bank to recognize crypto as a store of value. His appointment as deputy governor was announced last week.

In a statement given to the media at the Boao Forum in southern China on Sunday, the deputy governor of the People’s Bank of China, or PBoC – Li Bo stated that the regulatory authorities of the country are considering the benefits of crypto as an investment tool or option. He further stated that even though there are still regulatory risks associated with it for the central bank thus explaining its previous prohibition on initial coin offerings and cryptocurrency exchanges. The central bank official said stablecoins issued by private companies might require “stricter regulatory rules than Bitcoin.

He further added that these encoded digital assets are to be considered as an investment option or an alternative investment and not to deemed as currency itself.

China’s former central bank governor Zhou Xiaochuan, also attending the forum, agreed with Li stating that “everyone has to distinguish between digital assets and digital currencies.”

Following this announcement, one of Europe’s largest Hedge Fund Investment Firm Brevan Howard has decided to start buying investing in cryptocurrencies, and as of now, it has bought a 25 percent stake in One River Asset Management company that operates several cryptocurrency funds in the country. Brevan Howard was established in the year 2002 and It is currently having USD 13.7 billion in assets under management. The firm manages assets for institutional investors around the globe, including sovereign wealth funds, corporate and public pension plans, foundations, and endowments. The crypto investment company has decided to invest in a range of assets, but not just bitcoin, wherein it would initially invest up to 1.5 percent of its main USD 5.6 billion fund in cryptocurrencies.

Market infrastructure improvements have driven the cryptocurrency market growth to a certain new level. Several big companies like Grayscale Investments LLC, Fidelity Digital Assets, NEPC LLC, Bank of New York Mellon Corp, Goldman Sachs Group Inc., and so on have already started investing in the digital market and are also deciding on increasing their investment stakes. Setting its records, earlier in the month of April, cryptocurrency market capitalization topped the chart with USD 2 trillion for the first time in the investment market globally.

In 2020, the perception of digital assets improved as compared to earlier, leading to 58 % of U.S. investors stating a neutral or positive perception from 43 % in the year 2019 despite the global covid pandemic crisis. Currently, Heritage financial institutions and traditional investors who have been on the sidelines until now are also moving towards the crypto or digital assets industry. At the same time, some crypto companies are expanding and are seeking more regulatory attention for further growth and advancement.

China is currently ahead in the race of major economies developing a central bank digital currency and is planning a major trial of its digital yuan during the Winter Olympics in Beijing in 2022.

Roxanne Williams

Roxanne Williams has recently joined as a market reporter for CryptoNewsZ - the 24/7 crypto news site, where she produces recent stories, technical analysis and price updates on world's leading cryptocurrencies.

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