Chinese Cryptocurrency Industry Hits $86.4 Billion Amid Bitcoin Restrictions

People in China are developing inventive ways to invest in the growing cryptocurrency market despite the country’s continued prohibition on cryptocurrency trading. Recent data from Chainalysis analysis said that a volume of $86.4 billion in cryptocurrency was transacted between a 12 month timeframe; July 2022 and June 2023.

This amount simultaneously exceeds the cryptocurrency trade volume in Hong Kong, which was $64 billion. Since it was implemented in phases starting in 2013, China’s prohibition on cryptocurrency trading has yet to do much to discourage the country’s investors’ enthusiasm.

Chinese residents have adopted creativity to get around legislative constraints and use legitimate channels to interact with the digital asset market. A substantial flaw The primary means Chinese nationals can engage in the cryptocurrency market is the $50,000 yearly forex purchasing quota.

Chinese Government May Reconsider Cryptocurrency Trading As the Need Rises 

Although the quota is meant to be used for foreign exchange transactions, there have been reports of some people utilizing it to exchange their yuan for other currencies and then transferring these funds into Hong Kong-based cryptocurrency accounts.

Due to its comparatively slackly regulations regarding cryptocurrencies than China’s mainland, Hong Kong has emerged as a top choice for Chinese investors seeking exposure to digital assets. 

The current development, which has also led to an increase in trading volumes, has made most industry players speculate that the Chinese government is working on adopting cryptocurrency into its monetary system and is using Hong Kong as its experimental ground. The approval of the spot BTC ETF in the United States may compel the Chinese government to relax its position on the cryptocurrency restrictions and will create better working regulatory laws.

Chinese Cryptocurrency Traders Get Creative Amid Strict Cryptocurrency Laws 

The Chainalysis analysis shows that China’s $86.4 billion cryptocurrency trading volume greatly exceeded Hong Kong’s thriving $64 billion market over the same period. Despite regulatory restrictions, the spike in trading activity shows that China’s interest in cryptocurrencies is solid and enduring.

Hong Kong residents have, over the years, been looking for an alternative since the Chinese government introduced the cryptocurrency ban. This has caused retail cryptocurrency companies like OSL and HashKey Group to secure cryptocurrency licenses from the country’s Securities and Futures Commission (SFC).

Reuters has reported that Chinese traders now use their cards, insured by an approved commercial bank to purchase cryptocurrencies via grey-market sellers. These set of people have a strong conviction that it is much secured to invest in cryptocurrencies than the country’s stock market.

Reports Say Chinese Traders Spend $50,000 Yearly on Quotas

Reports from local Chinese media says that Chinese residents use $50,000 yearly forex buying quotas to move funds into cryptocurrency accounts in Hong Kong. Recall that in 2021, the Chinese government issued “a blanket ban “on cryptocurrency trading, mining, and investment in the country.

In their excuse, they cited market manipulation and other regulatory issues. However, cryptocurrency trading activities have been very active since the restriction took effect. In a recent observation, it was learned that investors from China make use of over-the-counter (OTC) arrangements, international bank accounts, and online cryptocurrency exchange platforms to buy cryptocurrency.

It was also learned that major exchanges like Binance and OKX render services for investors from China, allowing traders to convert yuan to stablecoins easily using either Alipay or WeChat Pay payment methods.