China’s eventual return to the cryptocurrency market could trigger a fresh wave of demand for Bitcoin, according to Solana Company CEO Joseph Chee, who says Beijing could eventually allow digital assets under a tightly controlled regulatory framework.
Chee’s view rests partly on the contrasting approaches taken by mainland China and Hong Kong. While Beijing has maintained restrictions on cryptocurrency trading and mining, Hong Kong has developed a regulated framework for digital-asset businesses and licensed cryptocurrency exchanges, giving policymakers a potential test case for how crypto markets can operate under supervision.
A broader reopening of China’s market would be significant for Bitcoin because of the size of the country’s population, savings pool and technology sector. But there is no indication that Beijing is preparing to reverse its current restrictions, making the prospect of a China-driven Bitcoin “supercycle” speculative rather than an established market trend.
China banned domestic cryptocurrency exchanges in 2017 and intensified its crackdown on crypto mining and trading in 2021. The country has instead promoted its central bank digital currency, the digital yuan, as part of its broader strategy to retain control over payments and monetary infrastructure.
Hong Kong has taken a different route. Its licensing regime for virtual-asset trading platforms allows regulated exchanges to serve investors under rules imposed by the Securities and Futures Commission. The territory has also sought to attract digital-asset companies and institutional investors as it competes with other Asian financial centres.
That experiment could give Beijing useful information about the risks and economic benefits of allowing limited cryptocurrency exposure, although analysts caution against assuming that Hong Kong’s policies will automatically be adopted on the mainland.
“China reopening” could also mean very different things for Bitcoin. Allowing mainland individuals to buy Bitcoin directly would have a much larger potential effect than permitting only institutions or selected financial products to gain exposure.
Bitcoin has already become a substantially larger asset class than it was during China’s previous crypto boom. Its market capitalization has risen into the trillions of dollars, meaning even relatively small changes in global allocations can translate into significant capital flows. The cryptocurrency has also become more accessible to institutional investors following the launch of U.S. spot Bitcoin exchange-traded funds in January 2024.
Those funds have helped broaden Bitcoin’s investor base beyond crypto-native traders. BlackRock’s iShares Bitcoin Trust, for example, became one of the world’s fastest-growing ETFs after its launch, while other major asset managers including Fidelity and Grayscale also introduced spot Bitcoin products.
The institutionalisation of Bitcoin has changed the nature of the market, said analysts, with the cryptocurrency increasingly trading alongside broader macroeconomic factors such as interest rates, liquidity and investor appetite for risk.
A return of Chinese demand could therefore arrive in a market that is already considerably more mature than it was before Beijing’s crackdown.
China’s role in global Bitcoin markets has also changed since 2021. Before the crackdown, the country was a major centre for Bitcoin mining and cryptocurrency trading. Mining activity subsequently moved to countries including the United States, Kazakhstan and Russia, although Chinese-linked companies and capital have remained active in the wider digital-asset ecosystem.
Bitcoin’s potential appeal in China would also have to be weighed against Beijing’s concerns over capital flight. Cryptocurrency has historically offered Chinese investors another potential avenue for moving wealth outside the country’s tightly managed financial system, one reason authorities have been reluctant to allow unrestricted crypto markets.
Chee’s argument is broader than China. He expects Bitcoin and other alternative assets to benefit from concerns over government debt, currency depreciation and the long-term purchasing power of fiat currencies.
Bitcoin proponents have increasingly compared the cryptocurrency with gold as a potential store of value, although economists remain divided over whether it behaves consistently enough to qualify as a traditional safe-haven asset.
Gold’s market capitalization is estimated at well above $20 trillion, while Bitcoin’s is a fraction of that, leaving considerable room for growth if institutional and sovereign investors were to allocate more capital to the cryptocurrency. At the same time, Bitcoin remains substantially more volatile than gold and can experience sharp declines during periods of financial stress.
Some analysts argue that Bitcoin’s limited supply makes it attractive as a hedge against monetary expansion, while critics point to its volatility and relatively short history as evidence that its role as a store of value remains unproven.
The prospect of renewed Chinese demand would therefore be only one part of the Bitcoin investment story.
Another major variable is regulation. Governments around the world are attempting to determine how cryptocurrencies should be treated under securities, payments, taxation and anti-money-laundering rules. The United States has moved toward greater regulatory clarity under a framework that has allowed large financial institutions to participate more directly in the market, while the European Union has implemented its Markets in Crypto-Assets regime.
The result is a fragmented global market in which access to Bitcoin increasingly depends on national policy.
For China, the question is not simply whether cryptocurrencies can be permitted, but whether they can be integrated without undermining capital controls or the government’s influence over the financial system.
Hong Kong provides one possible laboratory, but it remains unclear whether its regulated crypto market will become a template for mainland policy.
Chee is also betting on much broader adoption of blockchain networks. He has predicted that Solana could eventually reach one billion monthly active users within five years, a target that would require blockchain applications to expand far beyond their current use in cryptocurrency trading and decentralised finance.
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Mohd Hassan has extensive experience in news gathering, editing, and writing for the newswire industry, Contact – Info@impactnews-wire.com
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