$90 Billion Traded in China’s Crypto Market Despite Ban Restrictions
In a surprising twist that challenges common beliefs, recent reports suggest that China’s ban on cryptocurrencies may not be as absolute as previously thought. Contrary to popular belief, there appears to be a thriving cryptocurrency trade happening within the country.
Binance, the world’s leading cryptocurrency exchange, is rumored to have facilitated an astonishing $90 billion in Chinese cryptocurrency trade in just one month. This revelation is quite shocking and requires further examination.
China’s stance on cryptocurrencies is more intricate than commonly believed. While there have been crackdowns in the past, such as the exclusion of financial institutions from Bitcoin in 2013 and the ban on initial coin offerings (ICOs) in 2017, the regulations are not as straightforward as they seem.
Virtual currency exchanges were banned from operating openly in China, leading to a significant crackdown in 2021. Bitcoin was halted on the basis that it is not considered “real money.” However, despite these measures, people in China continue to hold cryptocurrency, and peer-to-peer trading persists.
Interestingly, China’s restrictions have left noticeable gaps, allowing people to find ways around them. Some individuals have continued to use accounts they opened on overseas exchanges, sometimes with the help of a VPN and sometimes without it. Others have resorted to trading directly using social apps like WeChat or Telegram. Some have even gone so far as to establish companies outside of China and use them to complete the institutional know-your-customer (KYC) identification process on cryptocurrency exchanges.
China’s cautious approach to cryptocurrencies stems from concerns about potential misuse for evading capital controls. However, the country has also shown a consistent interest in blockchain technology. They have issued a Web3 white paper and are exploring the development of a central bank digital currency.
This dual approach suggests that China is not completely shutting the door on cryptocurrencies but is rather aiming to control and regulate their activities while effectively managing associated risks.
Hong Kong plays a significant role in this scenario. Operating under the “one country, two systems” model, Hong Kong serves as a digital asset hub in Asia. Its favorable stance towards cryptocurrencies, coupled with approval from Beijing, allows China to maintain a strategic foothold in the cryptocurrency sphere while effectively managing risks.
In conclusion, labeling China’s cryptocurrency policy as a straightforward ban oversimplifies the more nuanced reality. It appears that China’s goal is to control and regulate cryptocurrency activities rather than completely eliminate them.