Crypto Quill

In a surprising move, a Chinese fund has highlighted its cryptocurrency investments, using an advertisement on Alipay, despite Beijing’s ongoing hostility toward digital assets. The advertisement, promoting the fund’s exposure to the booming cryptocurrency market, comes as Bitcoin reaches new all-time highs. This push highlights the persistent interest in cryptocurrencies among mainland Chinese investors, even amid stringent government regulations.

Fund’s Crypto Focus Amid Government Crackdown

The ad, visible on Alipay — a mobile wallet app owned by fintech giant Ant Group — boldly stated, “Cryptocurrencies soaring, start investing with 10 yuan.” It revealed that the fund, operated by Shanghai-based Hwabao WP Fund Management, is heavily invested in Coinbase, a major US cryptocurrency exchange, and the ARK 21Shares Bitcoin ETF, managed by US asset manager Ark Invest. The Qualified Domestic Institutional Investor (QDII) fund also boasts investments in the ARK Innovation ETF and ARK Fintech Innovation ETF, which hold significant stakes in Coinbase.

QDII funds provide a rare route for mainland Chinese investors to access foreign equities, including cryptocurrency-related investments. This advertising effort is designed to capture the growing demand for offshore crypto exposure, especially as Bitcoin’s price surged past $100,000 recently. The QDII fund is available for purchase across multiple platforms, including Ant Group’s wealth management arm, Ant Fortune.

Key Details of the Fund’s Crypto Exposure:

• Coinbase: The US-based cryptocurrency exchange listed on the New York Stock Exchange.
• ARK 21Shares Bitcoin ETF: A Bitcoin exchange-traded fund offering exposure to the cryptocurrency market.
• ARK Innovation ETFs: Focused on high-tech investments, including cryptocurrencies.

China’s Stance on Crypto and the Public’s Continued Interest

While Beijing has maintained a strict stance on cryptocurrencies, including banning crypto exchanges in 2017 and outlawing Bitcoin mining in 2021, the Chinese government has allowed individual ownership of crypto assets. This has created a paradox where Chinese investors can still hold cryptocurrencies, but the broader crypto market is heavily restricted.

The surge in Bitcoin prices, particularly with the rise of new US political support under President-elect Donald Trump, has fueled interest among Chinese investors. Trump’s promises to boost the crypto industry and the appointment of crypto advocate Paul Atkins to head the US Securities and Exchange Commission have been seen as positive signals for the market.

Despite Beijing’s regulatory crackdown, Chinese investors continue to seek exposure to cryptocurrencies through channels like QDII funds, which allow for investments in offshore assets. This reflects an ongoing demand for digital assets, especially as traditional financial systems in China continue to show little interest in cryptocurrencies.

Growing Tension Between Chinese Crypto Enthusiasm and Government Crackdown

The marketing campaign by Hwabao WP Fund Management is a clear indicator of how Chinese investors are finding ways to gain crypto exposure, despite government restrictions. The continued surge in Bitcoin’s price and the broader global interest in digital assets suggest that China’s hardline stance on crypto may be challenged by the resilience of the market. With the country’s regulatory environment still uncertain, Chinese investors are likely to continue seeking alternative ways to access the lucrative world of cryptocurrencies, especially through offshore investment vehicles like QDII funds.