In the world’s tightest regulated space for crypto investors, the same traders are bypassing regulatory barriers in the thousands. Chinese cryptocurrency traders and investors are circumventing the tough rules by means of foreign as well as local over-the-counter platforms. Another popular method is peer-to-peer networks. Both methods make it difficult for authorities to enforce their draconian regulations.
Chinese users are reported to be using OTC and P2P networks via an array of virtual private networks.
Over-the-counter desk activities have spiked ever since the Chines government introduced a majors crackdown on the local crypto market.
Bloomberg recently revealed in an article how OTC operation work:
“The first happens on OTC platforms operated by firms, including Huobi and OKEx, which allow traders to post bids and offers. Once both sides agree on a price, the buyer will use a separate payments platform, operated by their bank or a fintech company like Ant Group Co., to send yuan to the seller,”
Moreover, cryptocurrencies are also held in escrow by a platform until the payment in yuan is finished. Once this is in the clear, the digital coins are transferred to the buyer, right under the nose of Chinese authorities.
The nation is at the forefront of crypto regulations. Meanwhile, it is also currently first in the race for a centralized Central Bank Digital Currency, a prospect that can change how markets function around the globe significantly.