Exploring Methods Traders Employ to Circumvent the Cryptocurrency Ban in China

Despite the comprehensive ban on cryptocurrencies in China, resourceful traders within its borders have cleverly fashioned various ways to stay active within the crypto space.

The continuous crypto trading activities occurring under China’s restrictive regime demonstrate the complications that may arise for other countries trying to enforce similar crypto regulations.

Navigating China’s Ban on Crypto Trading

Through the use of messaging services such as WeChat and Telegram, Chinese traders coordinate peer-to-peer dealings. They often meet in locations such as coffee shops or coin-operated launderettes to exchange information like cryptocurrency wallet details and cryptocurrency-laden storage devices.

In addition to straightforward crypto exchanges, a variety of payment methods are used by these traders, ranging from cash handovers to bank wire transfers in exchange for crypto assets. Cities like Chengdu and Yunnan have become hubs for these activities, as they offer a certain level of obscurity from government scrutiny with its focus elsewhere.

“Despite the Chinese government’s extensive measures to eliminate crypto trading, it appears their efforts have been less than fully effective, possibly jeopardizing their stringent control over capital movement,” remarked Neeraj Agrawal from Coin Center, as quoted in a statement.

Moreover, traders have employed VPNs to access international cryptocurrency exchanges. While many exchanges have reported shutting down accounts from China, traders remain resolute in their quest for access.

A report from the previous year shed light on some traders utilizing counterfeit documentation to set up cryptocurrency accounts, thus skirting Know Your Customer (KYC) norms and other regulatory hurdles by providing falsified residency and banking information.

This persisting trend of unorthodox cryptocurrency trade sharply contrasts with the country’s strict regulation of the space, with crypto activities originally banned in 2013 and extended to cover crypto mining in 2021.

Further reading: Understanding Crypto Regulation: Pros and Cons

Even so, crypto-related activities within China remain vibrant. Recent figures from a Chainalysis analysis positioned China as one of the top Asian nations in terms of cryptocurrency transactions, notably with around $86.4 billion worth of transactions between 2022 and 2023. This points to the inherent difficulties of enforcing comprehensive crypto regulations against determined participants in the market.