Crypto regulations have affected the price of cryptocurrencies. In fact, crypto regulations today are a necessity considering the need to define digital currencies and ICOs. However, different countries have different approaches to the industry. You have the likes of Japan making rules that are adaptable to businesses. Also, the US is making steps towards crypto regulations such as the announcement of the US Securities and Exchange Commission that Bitcoin and Ethereum are commodities and not securities.
Unfortunately, there are those countries such as China that has imposed a complete ban on crypto-related activities. The reason is fear of capital outflow.
For an investor who came in early to invest in Bitcoin, it is not surprising how they’ve seen an astronomical growth of their investment. Unfortunately, Bitcoin investors from China are having a difficult time on how to make use of their digital coins. Guo Hongcai who is a beef salesman who became an early adopter from Shanxi province has started funneling his Bitcoin towards real estate abroad.
Hongcai decided to sell 500 bitcoins in the US and made use of the cash in order to buy a real estate mansion that is located in Los Gatos which is 90 minutes away from San Francisco. He also bought his own Rolls Royce thanks to Bitcoin.
He said that “It’s very normal to sell bitcoin in the US. After selling bitcoin, you can just buy anything you want”.
Runaround in The System
Of course, this is a runaround in the system. As the Chinese government clamps down on crypto-related activities, you no longer have crypto exchanges that you can rely on in China. Many are diversifying via real estate while others are also using Bitcoin in order to buy foreign currencies without even talking to your local bank.
Aside from the US, Hong Kong is another option for a lot of Chinese nationals. Hong Kong doesn’t require stringent tax and documentation compared to other assets that have been bought abroad. And because of this, there are those that make use of Hong Kong brokers in order to move their Bitcoin into Fiat.
Natalia Karayeneva who works as CEO of Propy said that “The requests we have from them start at $50,000 or $100,000 up to, the latest one was $3 to $4 million for Silicon Valley”.
She also said that “We’re seeing that more and more people are willing to buy properties with cryptocurrencies because it’s getting easier to get their money out of the country using bitcoin, rather than establishing a bank account based in Hong Kong and getting their money out of the country using business channels”.
If you will ask Roy Dekel who is the CEO of SetSchedule, he said that Chinese investors made use of cash in buying real estate. He mentioned that “We have noticed a drop in Chinese interest, but certain cities like Los Angeles, San Francisco, and New York Remain strong”. He also added that “The ultra-wealthy Chinese have used this source as a diversification of investment”.
Change in Regulation is a Must
According to the European Parliament’s report, it is a mistake to ban cryptocurrencies. For this reason, China should make the necessary change and lift the ban on cryptos. Do you think China will still maintain its ban? Or will it somehow loosen up its laws?