Chinese cryptocurrency trading is reportedly flourishing on social networks, messenger apps and other P2P markets, despite heavy restrictions on exchanges. This may include ICO projects who are still managing to raise funds on private forums.
It’s another example of decentralized, mostly-anonymous cryptocurrencies’ ability to simply route around new regulations. While online exchanges with staff and offices are easy to monitor or shut down, there’s no third-party service managing the transactions themselves.
In May, Bitsonline noted over-the-counter (OTC) trading was booming after regulators restricted deposits and withdrawals from centralized exchanges. However that proved to be only the beginning, with far more serious bans coming a few months later.
China issued a blanket ban on all ICO activity and even ordered previously-raised funds to be returned. Caught in the crossfire were bitcoin exchanges with no formal ICO trading, like Huobi and OKCoin. All exchanges — including Bter, CHBTC, BTCChina and ViaBTC — are currently shutting down their platforms.
Can’t Use Centralized Exchanges? Try P2P
Chinese people, however, have a reputation for enjoying commerce and trading. Without their favorite centralized platforms, they’re simply finding other means.
Reuters reported that China’s recent ICO ban and exchange closures have deterred only novice investors. Experienced, more determined investors have switched to forums and messenger apps to arrange peer-to-peer trades between themselves.
China is likely aware of this trend, and it may have been the reason it also recently banned WhatsApp, the encrypted messaging app popular in other countries. Telegram is also unavailable to regular users. The most popular messaging app in China, locally-developed WeChat, reportedly shares all user data with authorities (NB: developer Tencent has denied this).
Reuters added the exchanges bans also created an arbitrage opportunity, with savvy investors buying cheap BTC on Chinese exchanges and selling them for a profit on overseas platforms.
Crypto-to-Crypto Trading Harder to Control
Investors expressed defiance, saying digital asset and cryptocurrency trades are international and hard to tie to real identities. “They can’t stop me investing in what I want to invest in … they have no way to intervene,” said one man.
The report cited off-exchange methods like LocalBitcoins, LocalEthereum and even Paxful as booming since the Chinese bans. Some reported thousands of new signups from mainland China — though many are likely using VPNs to access foreign sites.
Local regulators everywhere (not only China) are capable of throwing up roadblocks to cryptocurrency use. However most of their power lies in controlling crypto-fiat gateways and monitoring all internet traffic.
They likely never considered the speed at which crypto-to-crypto trading would become so popular… or how commerce always finds a way to happen.
Have you ever traded bitcoin or other digital assets P2P? What are the best ways?
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