After China’s financial institutions recently banned the use of bitcoin (BTC) and cryptocurrencies in payment services, investment funds and savings, their use clandestinely increased, according to some reports. The Chinese Government considers that crypto assets are a risk for “not being backed by a real value” and for their high volatility in the market.
In this sense, have taken Cryptocurrency OTC platforms are on the rise in the Asian nation , which were installed since 2017 when national exchanges were banned. According to a report by the Bloomberg agency, these types of platforms, which operate clandestinely, have increased their operations since then.
Since the beginning of May, when this ban was announced, it has become an indicator among the population that the rate of change between the Chinese yuan and the stablecoin Tether, fell as much as 4.4% . Following this warning from local authorities, more than half of the loss has been recovered, according to the cryptographic data platform Feixiaohao, a Chinese equivalent of CoinMarketCap.
This measure has also given rise to so that local OTC platforms proliferate ( Over The Counter ) , which can be translated as « over the counter ‘, as well as peer-to-peer (P2P) networks. Due to the difficult-to-trace nature of these platforms, it can mean a difficult task for local authorities to enforce a wholesale ban.
According to the US news agency, the above may mean a relief for cryptocurrency enthusiasts globally after concerns were raised about a drop in BTC trading in the Asian nation. According to the data registered by the news agency, since mid-May almost USD 1 trillion in digital assets have been traded in China .
Losses and the repression of cryptocurrencies
A man identified as “Charles” was consulted by Bloomberg about the losses resulting from the recent drop in prices and about the censorship of cryptocurrencies in China. The 35-year-old real estate consultant based in Shanghai said those questions don’t matter to him. He assured that he has been buying cryptocurrencies since 2017 and claimed to have lost $ 11 million in three days in the recent pullback . He added: “For me it is to return the earnings I made in recent months,” he said. “I am looking at the horizon of 10 to 20 years,” he added.
On the other hand, China’s state media report that before local authorities banned cryptocurrency exchanges in 2017, investors They owned about 7% of the world’s bitcoin and accounted for about 80% of trade .
The exchange ban has made it impossible to measure those figures currently, but it is still widely believed that Chinese investors have a significant presence in the world of cryptocurrencies through domestic OTC platforms and exchanges from other jurisdictions to which they have access using virtual private networks.
China has banned bitcoin seven times
Since 2013 the Asian nation has restricted at least seven times any type of operation, commercialization or promotion of bitcoin or other cryptocurrencies.
As reported by CriptoNoticias, the Asian giant maintains a close relationship with BTC as a cryptocurrency , but it has been more flexible e for digital mining. However, this latter aspect of the industry is also starting to change with new provisions in the Inner Mongolia region, for example.
The restrictions imposed in China on trading with bitcoin and other cryptocurrencies could affect business innovation in the Asian country , estimated Sheila Warren, who led, in May 2021, at the World Economic Forum (WEF, for its acronym in English) the issues related to blockchain and digital assets.
Sheila Warren deputy director of the Center for the Fourth Industrial Revolution at WEF, said that the development of blockchain projects in China has been slow, and could be even slower after recent measures limiting trade with cryptocurrencies.