Chinese defy government and cryptocurrency trading rise
Cryptocurrency trading in China is being done in over-the-counter (OTC) and point-to-point (P2P) markets, making them extremely difficult for the government to track.
Since China increased repression against trade and mining of cryptocurrency last week, the faithful investors of Bitcoin ignored the government and found alternative solutions to trade digital assets through transactions point to point (P2P) and OTC.
The Chinese are not too concerned about the government’s biggest crackdown on cryptocurrency trading since 2017, and that should set an example for other countries that may try to ban digital currency.
According to Bloomberg, the rate of trading between the Chinese Yuan and stablecoin Tether fell 4.4% the day after the government alert, but recovered and almost doubled in a week – reflecting that the Chinese are challenging authorities and switching to more anonymous transactions.
Cryptocurrency trading is being done in over-the-counter (OTC) and point-to-point (P2P) markets, making them extremely difficult for the government to track.
A point-to-point transaction means that a transaction is carried out directly from the sender to the recipient – without a broker or company in between. They significantly increase the anonymity of those involved.
Briefly, sellers set prices and what types of payments they will accept. Many accept PayPal, bank transfers, credit cards, and most of the time cash.
Investors defy authorities
The emergence of OTC platforms and P2P networks as an alternative means that it is more challenging for Chinese regulators to ban digital currencies altogether, bringing relief to many traders inside and outside China.
OTC platforms are simply a way of exchanging unlisted assets with a regulated broker or through an order book. These platforms allow traders or investors to buy and sell more privately.
Investors request digital currencies on OTC or P2P platforms. When a buyer and seller agree on an offer, the buyer uses a different payment platform to settle the transaction.
Tracking the transaction and those involved, therefore, is almost impossible.
Although OTC alternatives allow cryptocurrency trading privately, they still pose some risks. Chinese regulators are notifying financial institutions to identify accounts that may be performing suspicious transactions.
These transactions are being identified as “money laundering and cryptocurrency”.
Although the exact data and volumes are quite difficult to determine since Chinese OTC transactions are point-to-point and mainly use third-party payment platforms, demand for USDT is growing in the country, according to data obtained by Bloomberg.
The migration to OTC markets recalls the situation in late 2017 when the country first imposed a general ban on cryptocurrency brokers.
China’s investors are still regarded as representing a large chunk of the global cryptocurrency trade, despite the crackdown, with data showing that China owns 7% of global Bitcoin funds.
Disclaimer: The information expressed in this article are solely those of the author and do not necessarily reflect the views of CryptoDeFinance. Each and every investment and trading move involves high risk. You should always conduct your own research when making a decision in crypto investment. *with information from moneytimes, cnbc, imf, coindesk, theblockcrypto