A report from the industry demonstrates that the stock market crash and Evergrande housing crisis caused a rise in cryptocurrency and Bitcoin trading in China.\
Despite imposing a comprehensive ban on Bitcoin and cryptocurrency investment, trading, and mining in 2021, China continues to see its citizens channeling funds into the crypto market. The ban was implemented due to concerns over market manipulation and inadequate regulatory oversight.
As reported by Reuters, Chinese citizens are resorting to purchasing cryptocurrencies through grey-market dealers using bank cards issued by small-scale commercial banks, perceiving crypto as a safer investment compared to the volatile stock and property markets.
At present, Chinese investors are utilizing over-the-counter arrangements, online crypto exchanges, and overseas bank accounts to procure cryptocurrencies. Additionally, prominent crypto exchanges such as OKX and Binance facilitate trading for Chinese investors by offering instructions for converting yuan from Alipay and WeChat Pay into stablecoins.
The small island nation of Hong Kong, situated near mainland China, has become a key player in facilitating Chinese citizens' efforts to circumvent the country's cryptocurrency ban. As a result of its more favorable stance towards digital assets and its proximity to mainland China, numerous cryptocurrency exchanges and investment firms have acquired licenses from Hong Kong's Securities and Futures Commission (SFC). Examples include HashKey Group and OSL, both of which hold retail crypto licenses from the SFC.
Despite the ban, Chinese citizens have reportedly been utilizing their $50,000 annual forex purchase quotas to transfer funds into cryptocurrency accounts in Hong Kong. On the internet, there is a recent report revealed that China witnessed a substantial crypto trading volume of $86.4 billion between July 2022 and June 2023, surpassing even Hong Kong's $64 billion volume.
These developments have sparked speculation regarding a potential shift in the Chinese government's attitude toward cryptocurrency, with a suggesting that Hong Kong could serve as a testing ground for these evolving efforts. Furthermore, the recent approval of the Bitcoin Spot ETF by the US SEC may prompt countries like China to reconsider their strict crypto ban and instead focus on establishing a regulatory framework.
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