Daily Management Review

Traders Defy Crackdown And China's Bitcoin Market Alive And Well


10/03/2017




Traders Defy Crackdown And China's Bitcoin Market Alive And Well
Traders of cryptocurrencies in China say that the market is far from dead, even as a chill was cast over the cryptocurrency industry just weeks ago when Beijing banned fundraising through token launches and ordered some bitcoin exchanges to shut.
 
Traders have now moved to buy and sell bitcoin directly with each other on peer-to-peer marketplaces and messenger apps while several exchanges have announced that they will close by the end of this month. still being marketed are some overseas-based initial coin offerings (ICOs), industry insiders say.
 
Market participants point to the limits Chinese regulators ultimately face in controlling the industry, where many users are anonymous and difficult to track even though the crackdown has dissuaded large swathes of less-experienced investors from participating in the trade.
 
With the price of bitcoin in China now trading at a discount to overseas exchanges, the crackdown has also created an arbitrage opportunity for investors in the short-run.
 
“They can’t set rules to stop me from investing in what I want to invest in. They say you are protecting me, but as long as I think this is good, they have no way to intervene,” a Chinese bitcoin investor named Victor, who declined to give his full name citing current sensitivities, was quoted by the media as saying.
 
“I can do over-the-counter trades or I’ll go offshore...My wallet is my wallet. I’ve never registered my identification card.”
 
The Chinese government ordered some cryptocurrency exchanges to shut after ordering ICOs to cease on Sept. 4. Since then, announcement for closure of their mainland businesses by the end of September has been announced by over 15 exchanges, including the three largest players OkCoin, Huobi and BTCChina
 
Bitcoin price in China has recovered to 24,101 yuan ($3,615.67) on Chinese exchange Huobi after a tumble of as much as 8 percent on the day of the announcement.
 
According to data website Coindance. On OTC platform LocalBitcoins, trading has spiked generally on peer-to-peer marketplaces. In the week starting Sept. 16, trading volumes reached 74 million yuan in China which is more than doubled from the previous week. And reaching 115 million yuan in trades, it hit an all-time-high in the week starting Sept. 23.
 
Coindance data showed that up from 351,102 in the previous week, volumes on Paxful, another smaller marketplace, also jumped to 1.7 million in the week beginning Sept. 23.
 
Mainland China users accounted for a fifth of its 5,000 signups since it opened for registrations on Tuesday, said Michael Foster, co-founder of localethereum.com, an over-the-counter marketplace for ethereum trading.
 
“The fact that bitcoin is still being traded is an indication that China isn’t looking to eliminate them, but reposition things in a way to have better control over them,” said Marshall Swatt, the founder of New York-based Coinsetter, a bitcoin exchange acquired by larger peer San Francisco-based Kraken in 2016.
 
And in order to avoid regulatory scrutiny traders were also moving away towards encrypted messenger app Telegram from Tencent’s WeChat app, other Chinese cryptocurrency players said.
 
(Source:www.reuters.com) 






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