Despite China’s cryptocurrency ban, the gray market is thriving, with a Chainalysis report revealing $75.4 billion in inflows from over-the-counter (OTC) traders in a recent nine-month period. The ban, implemented in 2021 due to concerns about capital flight and financial risks, has not deterred interest; underground channels for crypto transactions, including OTC and peer-to-peer trading, have surged. China ranks 20th on Chainalysis’ Global Crypto Adoption index, indicating a significant portion of the population continues to trade.
While Beijing has cracked down on violations of its crypto prohibitions, lenient enforcement may be driving growth. Notably, over half of the value in OTC trades involves transactions exceeding $1 million. Meanwhile, Hong Kong, which operates under a separate political system, recently approved spot bitcoin exchange-traded funds (ETFs) and aims to become a crypto hub akin to Dubai and Singapore.
Hong Kong has experienced substantial crypto adoption, recording an 85.6% increase over the past year. With challenges facing China’s real estate market and economy, many mainland investors are eyeing Hong Kong for crypto opportunities, though the regulatory response from Beijing remains uncertain.
Related Topics:
