Cryptocurrency trading isn’t as simple and straightforward in different parts of the world. Different countries have different regulations. In China, crypto-related activities have been banned. In fact, there is already a renewed effort by the government to ban crypto-related activities. It all started in September 2017 when crypto exchanges and ICOs were banned in the country. A few weeks ago, Chinese officials banned hotels and malls from hosting events that are crypto-related.
But does it completely stop Chinese traders from engaging in trading activities? It appears that there are many ways that crypto traders from China circumvent the nationwide ban on crypto-related activities. There are those who transact peer-to-peer which is not blocked by officials.
The Role of VPNs
China may have blocked access to 124 foreign cryptocurrency exchanges, but Chinese investors made use of virtual private networks (VPN) in order to access these foreign exchanges. There are also those who are leveraging Tether when it comes to exchanges cryptocurrencies for fiat currency.
On the part of exchanges, though the crackdown began in 2017 on local crypto exchanges, these crypto exchanges have reinvented themselves by using new domain names under foreign identities.
Difficulty to Completely Block Crypto-Related Activities
For industry experts, it is quite difficult for regulators to completely block crypto activities. If the trading platform servers are found outside China, as long as the transactions remain decentralized and peer-to-peer, traders can still find a way. However, this can have its consequences. For instance, it can decrease the interest of novice traders I the market.
According to Terence Tsang who works as the chief operating officer for Hong Kong centralized crypto exchange TideBit, “The latest warning and potentially increased monitoring of foreign platforms is targeted at a batch of smaller exchanges that had claimed to be foreign entities, but are in fact operating in China claiming they have outsourced their operations to a Chinese company”
Why not block VPNs? It has been reported that though regulators have the power to shut down VPNs, there are no restrictions regarding the use of VPNs in China. And this is one of the main loopholes that traders can take advantage of.
Continuous Crackdown on The Industry
In March this year, the state-run media criticized different crypto media outlets claiming that these media outlets are playing a role in manipulating the crypto markets. Just a few months after, regulators have pressured different companies such as WeChat and AliPay to act on crypto related accounts. This month, WeChat blocked cryptocurrency and blockchain-related media accounts for the reason that it has been found to violate the regulations of the messaging app.
AliPay followed along with WeChat Pay saying that both are working with the regulatory bodies in China and monitor crypto-related transactions happening within their respective platforms.
Tencent officially confirmed as well that they would block transactions and even ban accounts that they suspect associated with crypto activities. However, how they pinpoint accounts related to crypto activities were not revealed.
Is it possible for China to completely ban crypto activities in the country? Or it can only do so much to minimize interest in cryptocurrencies but will fail to stop traders from using digital currencies?