A woman stands at the counter of a Crypto HK office in Hong Kong, China January 22, 2024. REUTERS/Summer Zhen
The Great Crypto Ban of China: How Chinese Investors Are Getting Creative
Since 2021, China has put the kibosh on crypto trading and mining within its borders. However, this hasn’t stopped the intrepid Chinese investor. In fact, their crypto investments have seen a staggering 45% increase, which is nothing to scoff at. This surge in crypto interest comes at a time when China’s stock market has been on a steady decline for the past three years. It seems that, much like the protagonist in the movie “Run,” more and more Chinese investors are finding creative ways to get their hands on bitcoin and other cryptocurrencies, which they view as a safer bet compared to the faltering domestic stock and property markets.
Despite the ban on cryptocurrency in mainland China and strict controls on capital movement across the border, Chinese investors are still managing to trade tokens such as bitcoin on crypto exchanges like OKX and Binance, as well as through various over-the-counter channels. It’s been reported that the Chinese crypto market raked in a mind-boggling $86.4 billion in raw transaction volume between July 2022 and June 2023, leaving Hong Kong in the dust with its $64 billion in crypto trading, according to Chainalysis. What’s even more astounding is that the proportion of large retail transactions ranging from $10,000 to $1 million is nearly double the global average of 3.6%. This clearly indicates that the Chinese are not shying away from diving into the crypto world, despite the regulatory hurdles.
Interestingly, a significant portion of China’s crypto activity occurs through over-the-counter trades and informal, grey market peer-to-peer businesses, as revealed in the Chainalysis report. It’s a testament to the resilience and determination of Chinese investors who refuse to be deterred by governmental restrictions. Moreover, it’s become apparent that Chinese officials, while acknowledging the disruptive nature of bitcoin, are also keenly aware of its immense potential. This is evidenced by their tacit endorsement of crypto trading in Hong Kong, allowing them to maintain a foothold in the burgeoning crypto business in global financial hubs like Singapore and New York.
In conclusion, it’s clear that the ban on crypto trading and mining in China has not stifled the enthusiasm of Chinese investors. They’ve displayed remarkable ingenuity and adaptability in finding ways to navigate the restrictions and capitalize on the opportunities presented by the crypto market. As the global crypto landscape continues to evolve, it will be intriguing to see how Chinese investors further innovate and shape the future of cryptocurrency despite the regulatory roadblocks they face at home.
