Although the Chinese authorities have announced a ban cryptocurrencies fait accompli, it seems that traders find many ways to circumvent the ban, despite the increased oversight by regulators. The exchange is also seeking opportunities to avoid the closure, giving the citizens of China a chance to trade cryptocurrencies.
In late August, Chinese state-run newspaper Shanghai Securities Times reported that the government has consistently blocked illegally working exchange, and also may have blocked access to 124 offshore exchanges for the benefit of citizens of China.
Offshore stock exchanges bypass the ban by frequently changing domain names. In addition, they’re moving the servers outside mainland China where the Chinese authorities are difficult to track and stop their work.
In July, China’s Central Bank has released a report which stated that the ban on the cryptocurrency has been “incredibly successful”. Following the ban, the government closed many of the major exchanges, projects ICO and cryptocurrency projects, rapidly reducing the volume of trade and scaring citizens from these markets.
Although state regulators often continue to follow the above course, it is unlikely that authorities will ever be able to completely close access to cryptocurrency exchanges.
Terence Tsang, Head of centralized cryptocurrency exchanges TideBit with offices in Hong Kong and Taiwan, said in this regard:
“Last warning and the threat of tighter controls on foreign platforms targeted at several small exchanges that present themselves as foreign structures, but, in fact, work in China, saying that he had empowered to make their operation a local company. Exchange, start page, sites which are presented in Chinese, drew the rapt attention of Chinese regulators.”
Following the reports that the regulators intend to toughen measures against illegal working of exchanges, the volume of Chinese kriptoloji decreased by 33%. This fact likely indicates that traders moved assets in wallets to cold storage because the risks of storage of the currency on the exchanges.
Such transactions are as follows: Fiat currency are converted into the Tether, then payment is sent in exchange for virtual currency, and all actions in the network are made through a virtual private network (Virtual Private Networks).
Besides the fact that they use the services of illegal exchanges, Chinese traders are also turning to peer-to-peer trading, exchanging cryptocurrencies directly between wallets, in the absence of intermediaries such as exchanges.
The government has not yet blocked VPN, although the ban of these tools complicate direct cryptocurrency transactions.
Some Chinese company WeChat, Tencent and Ant Financial, among others – tried zablokirovali digital currencies on their platforms, subject to the requirements of the regulators.