Back in September 2017, China made it illegal to mine and trade all forms of cryptocurrencies. The law in place to facilitate the exchange of cryptocurrency as a means of trade was twisted by the government, barring both home and foreign financial institutions from taking part in mining and selling of cryptocurrencies all over China. Fraudulent activities involving the ICOs in China were to blame for the sudden move by the Chinese government. However, bitcoin remains to be an intellectual property going by China’s laws; but the same laws forbids its large-scale use in the market place, as a tool for exchange.
The end of crypto in China as it was thought earlier was the banning of ICO’s, while some have already faced prosecution in the past few months over their involvement in rogue financial practices. PlusToken, a big player in the deceitful game, was also caught in the act and faced the full wrath of the law, dealing a massive blow to crypto fanatics . The Chinese government reported that these institutions have made away with over $3 billion from gullible people.
These ICO’s having no place in China moved to Japan, where the laws on cryptocurrencies are still favorable.
Over the Counter Methods
In the wake of all these harsh legislative actions witnessed, cryptocurrencies are still in use all over China today. Users have found masks and disguises within which they can practice this illegality. Exchanges such as Huobi continue to perpetuate the exchange of cryptocurrencies to the consumers in guises. Huobi has successfully exchanged the Yuan to BTC under the keen eye of the government. While laws were put in place to halt financial risks and fraudulent activities, no action was taken to change the law to effect this correctly — a mere agency set up recommendations, which have little to no effect on cryptocurrency mining and trading.
The Chines people continue to trade cryptocurrencies in large numbers; clearly, the laws put in place earlier had little impact. Mining and trading of cryptocurrency continue to flourish in China. However, statistics in the area contrast a different picture in that the exchange of cryptocurrencies to Yuan has dropped sharply by over 98% following the ban in 2017. The statistics overlooked the over the counter trading of cryptocurrencies that have only skyrocketed after the ban.
Chatrooms and Cryptocurrency
Social media groups on popular platforms such as WeChat have increasingly facilitated the exchange of cryptocurrencies. These social media chat-rooms aid buyers and sellers to find each other, then exchange groups such as Huobi and bank transfers facilitate the transactions. However, the government is keen on shutting these activities down and is hotly in their pursuit.
Chat rooms in WeChat involved in trading have stringent rules and only accept members that have transacted before. Statistically, volumes of trade handled by both WeChat and Huobi are enormous and will only be on the upward trend in the future.