While the Chinese regulatory watchdogs have not failed to renounce their support over digital assets trading and crypto businesses in the region, investors still engage in the “forbidden act” using virtual private networks (VPNs) and the Tether stablecoin, reported the South China Morning Post on September 8, 2018.
Crypto Traders not Giving up
According to sources close to the matter, even with the existing ban on all things cryptocurrency in China, the market remains quite vibrant as most exchanges have formulated excellent ways of circumventing the blockade, including creating new domain names, moving their servers outside the nation, and also registering their businesses outside China.
Bitcoin traders, on the other hand, have been practicing peer-to-peer trading facilitated by the controversial Tether stablecoin and VPNs, with exchange platforms acting as overseers of the transactions.
Per the SCMP, the process works the same way people sell their products on e-commerce websites. In trading digital assets, two individuals who have completed their KYC procedures with the exchange platform would swap fiat money for tether.
The fiat currency is usually transferred through bank accounts or third party online payments processors. Once payment is confirmed, tether is sent to the account of the trader who’ll be able to trade crypto-to-crypto on exchanges of his choice using a VPN.
Chinese Crypto Regulators Losing the Battle?
As previously reported by BTCManager, in April 2018, China’s central bank, the Peoples Bank of China (PBOC) declared it had successfully crushed all crypto-linked ventures in the region. However, with the latest report, it’s evident that the battle is far from won even with the increased scrutiny.
Terence Tsang, the chief operating officer of TideBit, a Hong Kong-based crypto exchange, noted that the government is now monitoring crypto trading sites that claim to be foreign exchanges but have their landing pages written in Chinese.
Meanwhile, some observers have argued that the efforts of regulators in China will never yield a positive result. As there are no laws yet prohibiting the use of virtual private networks in the state, crypto traders will likely turn to these services as regulations clamp down.
“Chinese regulators have the technical ability to shut down VPNs. However, traditionally it takes numerous conversations with different stakeholders to reach a consensus on configuring a firewall, which lengthens the process,” an undisclosed source told SCMP.
In August BTCManager informed that several online platforms in China including WeChat instant messaging platform, AliPay, and Baidu had started restricting crypto-related information and payments.