China Bans Cryptocurrency Trading, It Turns Out That Crypto Users There Are Transactions This Way

Crypto users in China transact in secret. (Photo; Doc. NewsBTC)

JAKARTA - China is one of the countries hardest to ban crypto trading. Since 2021, Chinese authorities have closed local crypto exchanges, cracked down on crypto miners, and banned financial institutions from providing crypto-related services.

However, recent reports suggest that the crypto black market is still operating in China, by using all means to circumvent strict regulations.

According to the Wall Street Journal, some crypto traders in China remain active through informal networks involving VPN, social media, and physical trading. VPN or virtual private network is a technology that allows users to access the internet anonymously and safely.

Social media such as WeChat and Telegram are popular online communication platforms in China, also used for crypto transactions. Physical trading is a method that involves direct meetings between crypto buyers and sellers, without going through online exchanges.

WSJ reports that crypto traders in China are using these methods to get around government bans and maintain their activities on the global crypto market.

Citing data from blockchain analytic firm Chainalysis, WSJ showed that Chinese traders received a net amount of $86 billion (Rp1,342 trillion) from crypto transactions from July 2022 to June 2023. Their trading volume on Binance, one of the largest crypto exchanges in the world, reportedly reaches around $90 billion (Rp1,404 trillion) every month.

Crypto trading in China is reported to be more common in remote cities such as Chengdu and Yunnan, where law enforcement is looser. Traders often meet in public places such as cafes or clothing laundering places to exchange crypto wallet addresses or make transactions via cash or bank transfers. A number of traders also use accounts on foreign crypto exchanges that existed before the ban, and access them via VPN to hide their location.

Despite banning crypto trading, China does not reject the use of blockchain technology for other applications. China advocates blockchain development for areas such as digital identity, livestock tracking, and luxury product authentication. However, China prefers to use a private blockchain controlled by the government, rather than a decentralized blockchain that characterizes crypto.

The crypto black market in China shows that the industry has decentralized and global properties, which are difficult to control by the government. This provides an example of the real world about the challenges the government faces in regulating blockchain-based digital assets. Even so, China continues to strive to suppress the use of cryptocurrencies, by imposing legal sanctions on those who violate the rules.