Unstoppable? China Keep Trading Cryptocurrencies Despite Crypto Ban
According to a report by SCMP, industry observers have revealed that Chinese investors and traders continue to find a way around the tight regulations imposed by authorities in the country.
Despite the ban on cryptocurrency exchanges and other crypto-related activities in China, traders in the country are still trading cryptocurrencies with the help of VPN and Tether.
The report comes from local news outlet South China Morning Post (SCMP), a subsidiary of Alibaba.
Tether and VPN helpful to Chinese traders
According to the report, industry observers have revealed that Chinese investors and traders will continue to find a way around the tight regulations imposed by authorities in the country.
Citing reports from Beijing-affiliated Shanghai Securities Times, SCMP revealed that traders have started leveraging Tether (USDT) as a way of entering and leaving cryptocurrency markets.
How traders around working around the crypto ban
With the help of VPN, two traders can use an exchange platform registered outside China as a halfway to exchange cryptocurrency for fiat currency and vice versa.
It added that two customers who have who have both completed a ‘know-your-customer’ procedure with an exchange would swap fiat currencies to tether.
The retail traders would first convert yuan into tether (USDT) since the coin offers unparalleled stability in a highly volatile crypto market.
After that, the exchange will serve as the overseer of such trades and will intervene in cases of failed trades, or transactions that are not honored.
China can block VPNs
The report further added that authorities have not put measures in place to block VPNs, thus making it possible for smarter traders to keep their access to forbidden online resources.
A source close to a cryptocurrency exchange, however, noted that Chinese regulators definitely have the technical ability to shut down VPNs.
Due to technicalities, it takes numerous conversations with different stakeholders to reach a consensus on configuring a firewall and the process takes longer than expected.
China crackdown has not deterred traders
Authorities in the country have cracked down on cryptocurrency-related activities in the country. In September last year, cryptocurrency trading was banned in the country, a move that led to many crypto exchanges leaving the country to neighboring countries.
The ban by the government has subsequently led to the Yuan/BTC trading volume dropping by roughly 90%. The crackdown continued this year as crypto-related events were banned in Beijing and Guangzhou.
Just last month, Chinese authorities blocked web access to 124 foreign cryptocurrency exchanges still operating in the country.
Authorities are also working with third-party payment operators such as Alipay and WeChat Pay to cease processing cryptocurrency-related transactions.
Industry observers believe that as long as trading platforms’ servers remain outside China and P2P transactions are conducted by traders, it would be a huge challenge for the regulators to completely block access.