Despite a harsh trading ban, China’s underground crypto market continues to thrive, according to WSJ.
China’s stance on cryptocurrencies has been a rollercoaster ride over the past few years. In 2017, the country banned initial coin offerings (ICOs) and shut down local cryptocurrency exchanges, causing a significant blow to the industry. However, this did not deter Chinese investors and traders from finding alternative ways to participate in the crypto market.
According to a recent report by The Wall Street Journal (WSJ), China’s underground crypto market has continued to flourish despite the government’s strict regulations. This thriving underground economy is driven by a combination of factors, including the Chinese population’s strong interest in digital assets and their desire to circumvent government restrictions.
One of the primary methods used by Chinese investors to access cryptocurrencies is through over-the-counter (OTC) trading. OTC trading involves direct transactions between buyers and sellers, bypassing traditional exchanges. This method allows individuals to trade cryptocurrencies directly with each other, often using popular messaging apps like WeChat or Telegram.
The WSJ report highlights that OTC trading in China has surged since the government crackdown on exchanges. Many Chinese investors have turned to peer-to-peer platforms or social media groups to find potential buyers or sellers. These platforms act as intermediaries, connecting individuals who wish to trade cryptocurrencies.
To further evade government scrutiny, some Chinese investors have resorted to using virtual private networks (VPNs) to access foreign cryptocurrency exchanges. By masking their IP addresses, investors can bypass China’s Great Firewall and trade on international platforms. This method allows them to access a wider range of cryptocurrencies and take advantage of global market opportunities.
Another factor contributing to the thriving underground crypto market in China is the rise of decentralized finance (DeFi). DeFi platforms operate on blockchain technology and offer various financial services such as lending, borrowing, and yield farming. These platforms are often decentralized and do not rely on traditional financial intermediaries, making them difficult for authorities to regulate.
Chinese investors have been actively participating in DeFi, leveraging its potential for high returns and anonymity. By using decentralized exchanges (DEXs) and decentralized applications (DApps), Chinese traders can access a wide range of DeFi services without relying on centralized platforms that are subject to government restrictions.
While China’s government has taken a firm stance against cryptocurrencies, it is worth noting that the country has also been exploring the development of its own digital currency. The People’s Bank of China (PBOC) has been working on a central bank digital currency (CBDC) known as the digital yuan. This move aims to provide the government with better control over the financial system while still embracing the benefits of blockchain technology.
In conclusion, despite China’s harsh trading ban on cryptocurrencies, the underground crypto market in the country continues to thrive. Chinese investors have found alternative ways to participate in the market, such as through OTC trading, VPNs, and decentralized finance platforms. While the government’s regulations have undoubtedly impacted the industry, the strong interest in digital assets and the desire to circumvent restrictions have kept the crypto market alive and well in China.
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- Source Link: https://zephyrnet.com/chinas-underground-crypto-market-thrives-despite-harsh-trading-ban-wsj-2/