Gray Cryptocurrency Market in China Thrives Despite Ban
Date: 2024-09-26 Author: Henry Casey Categories: IN WORLD
The Chinese economy, despite banning cryptocurrencies in 2021, is facing a resurgence in underground channels. According to research by Chainalysis, Chinese OTC traders recorded $75.4 billion in turnover in nine months. This confirms that the ban on digital assets has failed to stop the growing popularity of cryptocurrencies among the population.
The main reason for the ban in 2021 was Beijing's desire to prevent capital outflows and reduce risks for investors. However, despite these measures, interest in digital assets remains. Most of the trades are made through over-the-counter (OTC) and peer-to-peer platforms. According to Chainalysis' ranking of crypto adoption, China ranks 20th, indicating significant activity despite strict laws.
While Chinese authorities continue to crack down on violators, the loosening of controls may be contributing to an increase in transactions. Chainalysis also notes that more than half of all OTC trades are in transactions larger than $1 million, indicating a high level of involvement by major players in this underground market.
A special mention should be made of Hong Kong, a special administrative region of China that, despite Beijing’s influence, is moving in the opposite direction. In April 2024, Hong Kong approved the first spot Bitcoin ETFs, which attracted the attention of global crypto companies. Aiming to become a major crypto hub comparable to Dubai and Singapore, Hong Kong is actively developing its crypto infrastructure.
Over the past year, the region has seen the most significant growth in cryptocurrency adoption in Asia, with an increase of 85.6%. With the Chinese real estate market and economy in turmoil, more and more investors from the mainland are looking to Hong Kong as a promising avenue for access to crypto assets. However, to what extent this will be supported or suppressed by the Chinese authorities remains to be seen.
