Home
News
- China hitting hard to control cryptocurrency trade with stricter regulations
- BTC values tank by 30% but recovers soon
- Chinese investors continue to bypass Chinese laws and invest in Bitcoin
China is tightening controls on the cryptocurrency trade with stricter regulations. However, despite introducing tough new laws, Chinese bitcoin traders are in no hurry to hit the slow switch. Despite a warning from the Chinese Government against indulging in speculative trading, continue cryptocurrency trade.
A Chinese crackdown led to a 30% tanking of Bitcoin values. However, the effects were not permanent, and Bitcoin recovered back by 10%. According to Matthew Graham of Sino Global Capital, Chinese traders are still forced to reckon with and cannot be intimidated. All the stories that the influence of Chinese traders is waning are a bit premature and greatly exaggerated. Graham is the CEO of Sino Global Capital.
The Chinese crackdown is nothing new under the sun, and in 2017 also the PRC had come down heavily on local cryptocurrency exchanges. It also banned the exchanges from raising money by launching new coins. The process is also known as initial coin offering in the financial jargon.
In 2015 Chinese renminbi (RNB) accounted for 92 percent of Bitcoin trading. However, post-2017 purge, the speculative market was crushed, and RNB share in Bitcoin shrank to 0.007 percent.
According to Graham, BTC plunged by more than 30%, but the Chinese clampdown is not the only reason. Other factors may have also played a part in the Chinese investors’ massive sell-off last week.
China’s grey market
Other nations have also tried out controls on cryptocurrency, but the results were often not very healthy. The clampdown in China led to a thriving grey market. After exchanges in Mainland China were closed, Chinese investors started looking at overseas platforms owned by the Chinese. These exchanges are not allowed in Chinese territory but enable investors to trade if they upload their Chinese identity cards. It is why RNB’s share in the crypto trade reduced to a trickle, but the share of Chinese investors in cryptocurrency did not decrease.
How traders bypass Chinese laws
Overseas exchanges do not allow the use of RNB or Yuan. However, they allow trading in pairs-Bitcoin with tether. Tether converts cash into digital currency and then anchors the value to the national currency. If it is linked to USD, it is known as USDT. Investors use peer-to-peer markets to buy USDT in RNB via online or bank transfers, bypassing Chinese laws of dealing in bitcoin. The USDT can later be used to buy Bitcoin and deposit it in overseas exchanges.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
