The Chinese government restricts gold imports? Bitcoin demand is rising again

According to Cointelegraph last week, the Indian government has planned to ban gold imports and impose heavy taxes on gold investors. Recently, the Financial Times reported that the Chinese government has restricted the country's gold imports since December to prevent capital outflows.

In the past few months, the People's Bank of China and the government have taken tough financial regulatory measures to control capital and crack down on wealth management products and fund transfers.

The latest tactic to stem the yuan's further depreciation is to restrict gold imports. The government may not issue licenses to banks and large financial institutions to import gold from international gold sellers.

According to the Financial Times and Chinese media reports, the People's Bank of China has maintained its policy of restricting gold exports, which has caused a drop in gold prices in the Chinese market.

In the coming weeks, the government plans to strictly regulate gold imports to prevent RMB outflows. As the RMB has fallen 5.8% against the US dollar this year, the central bank and related agencies are taking various measures to prevent the RMB from further depreciating.

In 2014, the People's Bank of China authorized the Shanghai Gold Exchange to establish an international committee to open the Chinese gold market to foreign investors. A year later, the Shanghai Gold Exchange launched daily gold auctions, allowing investors to easily buy large quantities of gold.

The impact of gold import restrictions on Bitcoin

In most regions, gold is considered a safe haven asset by investors, traders and companies. Especially in regions with strict foreign investment regulations, gold is a relatively safe asset with relatively low price volatility and high global exchange rates.

While the current restrictions on gold imports may lead to a surge in demand for gold, current gold import regulations restrict investors and traders from converting gold into foreign reserve currencies. Therefore, restrictions on gold imports are very likely to cause investors, companies and exchanges to seek other safe-haven assets with high liquidity and stable exchange rates.

China has a large OTC Bitcoin market, mainly because China has a large number of Bitcoin miners. Because Bitcoin transactions do not require middlemen or other third-party institutions, Bitcoin is exempt from fund transfer regulations. Bitcoin is likely to be seen by more Chinese investors and companies as a viable investment and property protection method.

On the other hand, due to India’s current demonetization and gold import ban, local Bitcoin prices in India are already far higher than those on most international Bitcoin exchanges. Similarly, China’s gold import restrictions could further drive Bitcoin prices higher.