Continuing raids in China on alleged underground gangs using cryptocurrency to facilitate foreign exchange transactions underscore the ineffectiveness of the Asian nation’s 2021 ban on crypto trading. Chengyi Ong, head of policy for the Asia-Pacific region at Chainalysis Inc., said the peer-to-peer nature of cryptocurrency activity renders the ban ineffective.
China Remains a Significant Cryptocurrency Market
Rising instances of Chinese raids on underground gangs and companies using digital assets to facilitate illegal foreign exchange transactions are exposing China’s seemingly faltering crypto prohibition, a Bloomberg report has said. It suggests that the alleged busts of gangs moving more than $140 million (one billion yuan) could indicate that China remains a significant crypto market, despite the 2021 ban.
As previously reported by Bitcoin.com News, China has not only curtailed the use of crypto but also cracked down on cryptocurrency mining. This crackdown is believed to have prompted many miners to relocate to more welcoming countries, resulting in China relinquishing its position as the world’s top Bitcoin miner. However, the Asian nation’s attempts to block or curb cryptocurrency trading have not been as successful.
The Bloomberg report explains that the persistent demand for crypto among Chinese residents can be attributed to their desire for alternative investments and a means to circumvent the country’s strict capital transfer rules. Additionally, understanding the decentralized nature of crypto assets like bitcoin (BTC) may also be sustaining Chinese residents’ interest in crypto.
Chengyi Ong, APAC policy head at Chainalysis Inc., suggested that authorities are struggling to extinguish crypto trading.
“A significant amount of crypto activity remains in China. This may be in part because the ban is porous or loosely enforced, but is also attributable to the decentralized and often peer-to-peer nature of crypto activity,” Ong said.
To support this claim, Ong’s firm estimates that up to $86 billion flowed into China despite the ban. Although the volumes are significantly lower than the levels before the ban, they still surpass those of Taiwan and Hong Kong. Ong asserts that China continues to see substantial activity because bans are ineffective in eradicating cryptocurrency activity.
She argued that a ban doesn’t end the crypto trade. Instead, it creates “informal grey markets” that are more challenging to monitor and protect against illicit activity.
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