Chinese Government Regulations & Peer-to-Peer Crypto Trading
Peer-to-peer crypto trading has become increasingly popular in China because of the government’s crackdown on centralized exchanges in previous months. When foreigners visit China, what they learn is that almost all mainstream websites are blocked by the Great Firewall of China. This means that you can’t access major search engines like Google, Google’s email services, and almost all of the useful pages that are indexed by Google’s search engine. Probably the only way around this is to use a Virtual Private Network (VPN) which will allow you to access just about all the websites on the internet.
Since the Chinese government has always censored or tried to control everything, it has also tried to interfere when it comes to dealing in bitcoin and other cryptocurrencies. The South China Morning Post reported that crypto enthusiasts in mainland China are circumventing government authorities by engaging in direct peer-to-peer exchanges. The National Committee of Experts on Internet Financial Security has determined that the Chinese Yuan’s share of peer-to-peer crypto trading has increased by four times its original share.
Popular messaging application Whats App is blocked in mainland China. However, this has done little to deter crypto traders because they use WeChat, Tencent’s messaging app, to communicate. Due to concerns that their conversations might be monitored by the government, many traders have jumped onto a more secure (encrypted) and private program called Telegram. One of the things that’s interesting to note here is that according to human psychology, the more you try to discourage something, the more people are inclined to do it. In this case, it happens to be through peer-to-peer crypto trading.
Matthew Graham, chief executive of Sino Global Capital, one of China’s leading financial services companies, says peer-to-peer cryptocurrency exchanges will continue to increase. P2P exchange platforms also referred to as over-the-counter, were only a handful. However, probably after China began to ban centralized exchanges. the number of over-the-counter exchange platforms has increased to 21.
Possible Reason for Chinese Government’s Crackdown
Bitcoin and other cryptocurrencies were frequently associated with illegal activities like money-laundering or drug dealing, especially in the early days of digital currencies. Perhaps this is one of the reasons behind the Chinese government’s crackdown on the crypto-market. What we do know is that China is continuously trying to fight money laundering. One of ways the government does this is by taking a few basic preventive measures. For example, the largest bill the Chinese government issues is 100 Chinese Yuan. This is roughly equivalent to only $15. So, this makes money laundering efforts more difficult.
While it is not possible to curb cryptocurrency money laundering this way, China has responded by not only trying to ban centralized crypto exchanges but also by banning ICOs. Despite these government regulations, the crypto craze has only increased in China because of the popularity of peer-to-peer crypto exchanges. As China is on target to become the world’s leading economy before 2030, it might want to take a closer look at the emerging crypto-market and its revolutionary blockchain technology. Working together and cooperatively with leaders of the cryptosphere could benefit China in the long run.