Chinese Users of the Binance and FTX Exchanges:- Some people in China are still buying and selling digital assets, even though the country banned cryptocurrencies 19 months ago. This suggests that they may be looking for new investment options besides things like real estate and stocks.
It’s hard to know for sure how many Chinese people are interested in cryptocurrencies because there isn’t much information available. This makes it difficult to predict what might happen to the digital-asset markets in the future. In 2023, things seem to be getting better after a rough 2022, which saw some crypto exchanges go bankrupt.
Cryptocurrencies
People are saying that China might allow cryptocurrencies again, but nothing has been confirmed. Even though there is a ban on digital assets, some Chinese citizens are still interested in them. This information comes from different sources, including people who say they have used crypto platforms and experts who know how to get around the ban.
There are also reports that Hong Kong is starting to like cryptocurrencies more, and China might support this. It’s hard to know what will happen to digital-asset markets in the future because of all these factors. Recently, they have gone up and down a lot.
According to Caroline Malcolm, who works at Chainalysis, banning cryptocurrencies doesn’t work. It’s tough for any government to completely eliminate them because they’re decentralized and can be traded globally and peer-to-peer.
The US bankruptcy filings of FTX show that 8% of the exchange’s customers were Chinese users. FTX had over 9 million customer accounts and creditors are claiming $11.6 billion.
Jack Ding
Jack Ding, a partner at Duan & Duan Law Firm, represents six Chinese creditors who have $10 million in FTX claims. They are part of a group for foreign FTX customers.
Jack Ding says that enforcing China’s ban on crypto trading is challenging due to the difficulty of blocking Chinese passport holders on crypto exchanges. The Chinese government banned crypto trading because of concerns about money laundering, currency outflows, and the environmental impact of Bitcoin mining. Exchanges such as Binance, OKX, and FTX used to attract Chinese investors to boost their growth.
Crypto platforms have attempted to block Chinese IP addresses, but virtual private networks (VPNs) can be used to conceal the user’s location and bypass such attempts.
Chinese investors
Chinese investors are facing a challenge with complying with cryptocurrency trading regulations. Despite the government’s ban on cryptocurrencies, some Chinese investors have revealed in interviews that they traded on Binance and OKX platforms. Binance is currently the largest cryptocurrency exchange while OKX ranks second according to CoinGecko’s data on 24-hour trading volumes.
The investors who spoke out expressed frustration over their accounts being suspended, either currently or in the past. Four of them said they lived in mainland China and had passed the know-your-customer procedures using Chinese identification.
When asked to comment on the issue, OKX declined, while a spokesperson for Binance stated that the company does not operate in mainland China and has no technology, including servers or data, based there.
Chinese Government
The Chinese government has banned crypto trading, but it’s hard to enforce since compliance systems at exchanges can filter out Chinese passport holders. Some Chinese investors have traded on platforms like Binance and OKX after the ban, but their accounts have been suspended.
Binance has been blocked by China’s internet censorship system, known as the “Great Firewall,” and a Chinese investor living in Silicon Valley had $8 million of crypto frozen on Binance since July after a police request. Binance claims to cooperate with lawful information requests and legal inquiries but can reject requests that don’t meet legal scrutiny or serve a legal purpose.
Huobi Global, a cryptocurrency exchange, reportedly offered Chinese users a way to get a “digital identity” with the small island nation of Dominica. This would show them as being citizens of Dominica in their app profile. However, Huobi claims to have left the Chinese market and doesn’t allow Chinese users to sign up or access the platform using their IP addresses. The company says it only accepts new customers from other countries.
The People’s Bank of China banned all crypto-related transactions in September 2021, but Chinese citizens may still be trading virtual assets, according to recent reports. Chinese regulators have not taken any action against offshore exchanges that allow mainland users.
Malcolm
Malcolm from Chainalysis suggests that the ban has either been ineffective or loosely enforced. Despite a decrease in the average monthly value of crypto flowing into China in 2022 compared to the previous year, it remained significant at $17 billion.
If China were to legalize the crypto sector in the future, it could lead to a surge in demand for cryptocurrencies, according to Malcolm. Sidhartha Shukla and Yujing Liu contributed to the reporting of this story.
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