Despite the recent strengthening of China’s crypto ban, chinese traders and investors are finding alternative ways to transact, largely using over the counter platforms and offshore venues.
Following China’s most recent cryptocurrency ban, which included the banning of bitcoin mining and led to a number of major Bitcoin mining operators suspending their activities, a flurry of crypto companies moved their operations overseas. Huobi Mall, a cryptocurrency mining operator, stated that they were in the process of contacting overseas providers, while BTC.TOP declared they would be moving their business to North America.
In light of the recent actions by the Chinese government, major market disruption was expected. However, as Chinese regulators have not made individual trading illegal, Chinese crypto traders are still using over the counter platforms, and trading is on the up in difficult to trace peer-to-peer networks and OTC platforms.
Bloomberg has reported that “Chinese regulators often have no way to connect one step of the transaction to the other”. Nonetheless, police action has reportedly been taken against individuals who continue to transact. Police in Bejjing have released warnings about the risks of cryptocurrency, and there have been unverified reports of Chinese police requiring individuals to sell holdings and delete cryptocurrency trading apps.
And despite China’s crypto market dropping considerably from its prime trading days in 2017, where China accounted for an estimated 70% of the world's crypto supply, the current sentiment in China is still positive when it comes to the future of Bitcoin.
According to the People’s Bank of China, any widespread investment in cryptocurrency poses a risk for the Yuan, which has led to them being the first to release a series of digital Yuan trials, and move forward with their plan to release a central bank digital currency.
As crypto tentatively begins to recover, China’s defiance of the government's regulatory body indicates a support of cryptocurrency from the crypto community. The consequences of which remain to be seen.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.