As one of the world's largest economies, it is not surprising that China has a history with cryptocurrencies. However, that history is not a positive one. Ever since the crypto price surge of 2017, the Chinese government has issued a series of bans, which sparked a lot of debate, speculation, and misunderstandings when it comes to the country's real stance towards cryptos, ICOs, and other aspects of the digital finance industry.
Simply put, cryptocurrencies are still not illegal in China, which is a good thing. However, the country's law characterizes it as property. On the other hand, non-OTC exchanges, crypto brokerages, as well as ICOs themselves are fully illegal, meaning that the country won't allow any connection between its fiat currency — yuan — and cryptocurrencies. This is also bad news for any crypto exchange, as they are forbidden from facilitating sales and purchases of digital coins. Mining is still permitted, and even though a proposal to ban it was made earlier this year, in April — it is still not the official law, so it doesn't count.
With a situation like that, where the country is clearly against cryptocurrencies and crypto trading, it would be expected that its citizens would do all they can to stay away from crypto. Fortunately, the gray area is still large enough for OTC trading to survive, mostly thanks to international crypto exchanges. China is filled with crypto traders, and while they still have to rely on technologies such as VPN in order to trade — they did find a way. Stablecoins like Tether (USDT) also play a large role in this, and many exchanges that either moved away from China or were foreign, to begin with, are still targeting Chinese traders.
Not only that, but China clearly understands the advantages of crypto, and despite the fact that it is cracking down on digital money — it is also reportedly working on creating its own crypto.
China is a communist nation, a massive economic powerhouse, and a country that likes to keep a tight leash on everything. Their attempts to control everything and ban all the things that they can't control is not only reserved for the crypto space. In fact, fiat transactions are also heavily regulated.
For example, those living in China are forbidden from making off-shore transactions that are larger than $50,000 per day. Anyone looking to do so needs to turn to the government and apply for special permission. Of course, many are still bypassing this by making numerous small transactions, where different parties join in to help with the process. Even some unofficial brokers are doing this. Luckily, expats who moved to China do not have to abide by this, although they do have to provide proof that their income is not illegal, which can range from being difficult to being impossible.
With all of that in mind, it is clear that China's citizens have gotten quite used to finding a way around strict laws, prohibitions, and regulations whose violation is more than likely to result in a prison sentence. This is why they are not ready to give up on their economic freedom, especially when it comes to cryptocurrencies, which are way too convenient, particularly because of their decentralization. And, as mentioned, technologies like VPN allow them to reach foreign exchanges and continue trading.
Of course, the country's government is none too happy about it, but they cannot fully ban VPNs either, as major corporations require them in order to do their business. The same goes for the government itself. China's great filter (The Great Firewall of China) is not selective when it comes to who can and who can't bypass it. Either no one can do it, or everyone with a VPN can. If China eliminated VPNs completely, its own economy would likely collapse, which is not something that they can afford.
They did try to use some old laws that would ban VPNs apart from cases where someone receives official permission by the government, but the whole use of this technology is still in a legal gray area. As long as the situation remains like that, the use will likely continue, and China's people will keep buying crypto overseas and continue making a profit. After all, that is the beauty of cryptocurrencies — the real ones truly cannot be controlled by any government.
As mentioned, a stablecoin known as Tether (USDT) also plays a major role in Chinese crypto trading. Tether is one of the largest cryptocurrencies by market cap, sitting on the list of top 10 cryptos and occupying the sixth spot, at the time of writing. Its current market cap is at $4.12 billion, and it is one of the main crypto tools that Chinese traders use.
With Tether being so popular with Chinese traders, Tether Holdings — the company that launched USDT — also decided to release a yuan-based stablecoin — CNHT. After USDT already proved its usefulness to the people of China, many ended up being supportive of the effort, even though there were also many who questioned the wisdom of such a move.
As for USDT itself, it has proven to be quite useful and successful when it comes to bypassing regulations of restrictive governments, with the government of China being included. It was estimated that USDT transactions accounted for around 40% of total transactions on Binance, and up to 80% of total transactions on Huobi.
In the end, the current situation in China allows for only two options — its citizens can choose to leave the country if they want to work with crypto or to do it secretly, by utilizing new and advanced technologies to bypass restrictions. Neither choice is especially great, but many believe that the country is wrong for denying its citizens the ability to enjoy new opportunities, and so they are taking matters into their own hands.
|Exchange||Volume change, 24h|