Grim economic news raises stakes for embattled chancellor Rachel Reeves’s controversial China trip

Published

3 months ago

January 12, 2025

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Rachel Reeves’s trip to China – the first by a British chancellor since 2019 – was always going to be controversial.

In recent years Conservative governments have been keeping Beijing at arm’s length – amid concern about espionage, the situation in Hong Kong, and the treatment of the Uyghurs.

David Cameron‘s so-called “Golden Era” of engagement in the pursuit of economic investment, notoriously capped by a visit to an Oxfordshire pub for a pint with President Xi Jinping – has been widely written off as a naive mistake.

There are many – not least the incoming US President Donald Trump – who believe we should maintain our distance.

But in another era of economic turmoil, the pursuit of growth is the government’s number one priority.

This week’s difficult market news – with the cost of government borrowing surging, and the value of the pound falling – has thoroughly raised the stakes.

Both the Tories and the Lib Dems argued the visit should be cancelled.

Prominent China hawk and former Conservative leader Iain Duncan Smith MP summed up both arguments against it.

“The trip is pointless,” he wrote on X. “As the disastrous ‘Golden Era’ showed, the murderous, brutal, law-breaking, communist regime in China will not deliver the growth the Labour government craves.

“Instead, she should stay home and try to sort out the awful mess her budget has created.”

Yet cancelling the trip would have been a diplomatic disaster and far from adding to economic stability would surely have spread a sense of crisis (with inevitable comparisons to Denis Healey’s abandoned visit to Hong Kong in 1976, months before he was forced to apply from an emergency loan from the IMF to save the pound from collapse).

Instead, the government argues the current market situation is a result of “global trends”, and Reeves insists she will be sticking to the decisions taken in the budget.

“Growth is the number one mission of this government. The fiscal rules laid out in the budget are non-negotiable. Economic stability is the bedrock for economic growth and prosperity.”

Improving the UK/China relationship should “boost our economic growth for the benefit of working people in both of our countries” she said during her meeting with vice premier He Lifeng.

In a speech to media afterwards, Reeves was delighted to announce a big, concrete number to justify the value of the trip, claiming the agreements reached would be worth £600m to the UK economy over five years.

Pragmatism is the new order of the day. Labour argues re-establishing “pragmatic engagement” with China is in the national interest, and it’s a word Reeves used four times in five minutes during her speech.

Ed Conway analysis: The chancellor’s gamble with China

The government insists this new closer relationship will make it easier for them to raise tricky issues and we did hear the chancellor flagging concerns about Hong Kong and the role of China in connection with Russia’s war in Ukraine – though not the Uyghurs, or the imprisoned British citizen and pro-democracy activist Jimmy Lai.

The challenge going forward will be to show that cosying up to China is worth it.

There’s a lot riding on it for the chancellor – with questions being openly asked about her economic strategy given the growing likelihood that to meet her fiscal rules on balancing tax and spending she will be forced to make deep cuts to government departments this spring.

We are promised a big speech from the chancellor on the government’s plans for growth in the coming weeks.

In many ways, the trip to China may have been a welcome break from the difficult decisions which await her return.

Politics

Crypto industry is not experiencing regulatory capture — Attorney

Published

9 hours ago

April 19, 2025

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Crypto industry is not experiencing regulatory capture — Attorney

Brandon Ferrick, general counsel at Douro Labs, said that the Securities and Exchange Commission’s (SEC) openness to public input on crypto policy and their roundtable discussions are positive signs that the crypto industry is not currently experiencing regulatory capture.

In an interview with Cointelegraph, Ferrick identified signs of regulatory capture including, a public-to-private sector revolving door of employees, the same roster of attendees at regulatory events, and special treatment given to certain crypto projects. However, Ferrick added:

“The reason why I am not worried today is that a lot of what you’re seeing from the regulatory side, like the SEC, for example, is totally open, public, and there are available opportunities to have conversations with the regulators about changing or thinking about the regulatory structures.”

“[The SEC] has a public portal where you can just submit written commentary on your thoughts for the crypto regulatory environment, and you can schedule meetings with them,” the attorney continued.

As the crypto industry becomes more integrated with the traditional financial system and engages state regulators more, some analysts and executives are worried that the industry is experiencing regulatory capture that will skew incentives and politicize the burgeoning crypto sector.

SEC hosts several roundtable discussions on crypto policy

The SEC has hosted several crypto roundtable discussions and panels, with more slated in the coming months — a sharp contrast from the agency’s regulation-by-enforcement approach under former SEC chairman Gary Gensler.

On March 21, the regulatory agency hosted its first crypto roundtable, which featured crypto industry executives, SEC officials, and even opponents of the crypto industry.

Former SEC official John Reed Stark was highly critical of the industry and opposed comprehensive regulatory reform, arguing that digital assets must comply with existing securities laws.

The SEC’s April 11 roundtable focused on trading rules and included a different set of panelists, including representatives from Uniswap and Coinbase.

The next SEC panel will occur on April 25 and focus on establishing guidelines for crypto custodians and other firms holding crypto on behalf of customers.

Magazine: SEC’s U-turn on crypto leaves key questions unanswered

Politics

UK firm buys $250M Bitcoin as analysts eye quiet Easter weekend

Published

12 hours ago

April 19, 2025

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UK firm buys 0M Bitcoin as analysts eye quiet Easter weekend

Whales and institutions are increasing their Bitcoin holdings ahead of Easter, as market analysts predict a weekend with less volatility after two weeks of heightened volatility driven by escalating global trade tensions.

London-based investment firm Abraxas Capital acquired 2,949 Bitcoin (BTC) worth more than $250 million during the four days leading up to April 19.

In the latest transaction, the firm bought over $45 million worth of Bitcoin from Binance on April 18, according to crypto intelligence firm Lookonchain, citing Arkham Intelligence data.

UK firm buys $250M Bitcoin as analysts eye quiet Easter weekend — *Source: Arkham Intelligence,* *Lookonchain*

The investment came days after Michael Saylor’s Strategy bought $285 million worth of Bitcoin at an average price of $82,618 per BTC, as the world’s largest corporate Bitcoin holders signal continued confidence in Bitcoin, amid global tariff uncertainty.

Large Bitcoin investors, or whales, continue accumulating, absorbing over 300% of Bitcoin’s yearly issuance as exchanges continue losing coins at a historic pace, Cointelegraph reported on April 18.

Crypto analysts eye quiet Easter weekend after weeks of turmoil

Despite continued accumulation from whales and institutions, volatility concerns were raised by significant movements from the medium-term Bitcoin cohort, which holds coins for an average of three to six months.

Over 170,000 Bitcoin entered circulation from the medium-term cohort, a development that may signal “imminent” crypto market volatility, according to pseudonymous CryptoQuant analyst Mignolet.

“The effect of this metric on LTF moves is overstated as large onchain movement of coins hardly ever affects weekend price action since it’s not on liquid markets or CEX markets,” analysts at Bitfinex exchange told Cointelegraph, adding:

“It is important to note that funding rates remain relatively flat currently. Moreover, US markets are closed as we have a long weekend for Easter, so volatility could be suppressed barring headlines from the White House.”

Marcin Kazmierczak, chief operating officer of RedStone Oracles, added that the recent movements may be operational transfers, not necessarily signs of imminent selling pressure.

Still, concerns over weekend volatility have been amplified over the past two weeks after the Mantra (OM) token’s price collapsed by over 90% on Sunday, April 13, from roughly $6.30 to below $0.50, triggering market manipulation allegations and highlighting “critical” liquidity issues in the industry.

Two weeks ago, on April 6, Bitcoin fell below $75,000 on Sunday, as investor concerns spread from a record-breaking $5 trillion sell-off from the S&P 500, its largest on record.

The correction was caused by Bitcoin’s 24/7 trading availability, which made it the only large liquid asset available for de-risking on Sunday, Blockstream CEO Adam Back told Cointelegraph.

“On a weekend, there’s not much volume. So you have a worse risk of rapid sort of flash crashes or flash dips that get filled in again,” he said.

Magazine: Bitcoin ATH sooner than expected? XRP may drop 40%, and more: Hodler’s Digest, March 23 – 29

Politics

Crypto, DeFi may widen wealth gap, destabilize finance: BIS report

Published

15 hours ago

April 19, 2025

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Crypto, DeFi may widen wealth gap, destabilize finance: BIS report

The growing adoption of cryptocurrencies may pose risks to the traditional financial system and exacerbate wealth inequality, according to the Bank for International Settlements (BIS).

In an April 15 report, the BIS warned that the number of investors and amount of capital in crypto and decentralized finance (DeFi) have “reached a critical mass,” with investor protection becoming a “significant concern for regulators.”

The size of the crypto market signals that authorities should be worried about the “stability of crypto over and above the role it may have for TradFi and the real economy,” the report states, highlighting the role of stablecoins, which the BIS said have “become the means through which participants transfer value within crypto.”

The report calls for targeted stablecoin regulation on stability and reserve asset requirements that will guarantee the redemption of stablecoins for US dollars during “stressed market conditions.”

The report comes two weeks after the US House Financial Services Committee passed the Stablecoin Transparency and Accountability for a Better Ledger Economy, or STABLE Act, with a 32–17 vote on April 2.

Cryptocurrencies, Banking, Banks, Central Bank, Bitcoin Price, Investments, Bitcoin Regulation, United States, BIS, Stablecoin, Cryptocurrency Investment, Bitcoin Adoption — *Source:* *Financial Services GOP*

The STABLE Act aims to create a clear regulatory framework for dollar-denominated payment stablecoins, emphasizing transparency and consumer protection.

On March 13, the GENIUS Act, short for Guiding and Establishing National Innovation for US Stablecoins, passed the Senate Banking Committee by a vote of 18–6. The act aims to establish collateralization guidelines and require full compliance with Anti-Money Laundering laws from stablecoin issuers.

Crypto may exacerbate wealth gap

The BIS also raised concerns about how crypto markets may worsen income inequality by enabling larger investors to capitalize on the emotions of less sophisticated retail participants, as seen during the FTX collapse in 2022.

“As prices tumbled in 2022, users actually traded more,” the BIS report noted. “Most disturbingly, large bitcoin holders (“whales”) were selling as ordinary retail investors (“krill”) were buying.” It added:

“This implies that the crypto market, which is often presented as an opportunity for inclusive growth and financial stability, can be a means for redistributing wealth from the poorer to the wealthier.”

The report concludes that DeFi and TradFi have similar underlying economic drivers, but DeFi’s “distinctive features,” like “smart contract and composability,” present new challenges that need proactive regulatory interventions to “safeguard financial stability, while fostering innovation.”