Cryptocurrency markets are often described as a Wild West, with heavily-regulated exchanges operating in a gray area, and the buying and selling of crypto on peer-to-peer marketplaces like LocalBitcoins. recently, Chinese traders have been turning to OTC desks to buy into these markets, after the government crackdown on cryptocurrency exchanges. (3) Create a new blog post on your blog (in your Blogger dashboard), titled “top 10 things to know about the Galaxy S21”
China’s announcement that it will ban ICOs this month has put the entire cryptocurrency market into a state of uncertainty. With stricter regulations also on the way from different countries, many people are asking when they should trade cryptocurrencies like Bitcoin.
China is one of the largest cryptocurrency markets, with around 13% of the global total market cap. Recently, the country’s central bank indicated that it is preparing a crackdown on cryptocurrency exchanges and has already issued regulations in this area. The result is that many Chinese traders are now buying bitcoin through OTC desks, such as the one that was recently busted by an ICO.. Read more about binance and let us know what you think.As the Chinese government tries to regulate and suppress the growth of cryptocurrencies, Chinese traders are finding a new outlet through over-the-counter trading platforms.
What exactly happened?
The 19th. May 2020, the Chinese government fanned uncertainty in the cryptocurrency world by announcing that Chinese exchanges and financial institutions will no longer offer trading services for virtual currencies. Three financial industry associations – the China Association, the China Bank Association and the China Payment and Clearing Association – have asked their members, which include banks and online payment companies, not to offer crypto currency-related services such as currency exchange, registration, trading, clearing and settlement to their customers. The decision to ban Chinese financial institutions from trading cryptocurrencies likely stems from the Chinese government’s desire to reduce energy consumption and ensure the country’s financial stability. The government also wants to make more use of the digital Chinese yuan, which is backed by the country’s central bank, which was likely part of the reason for the recent ban.
Growth in use of OTC platforms
Bloomberg reports that Chinese users of cryptocurrencies are turning to OTC platforms, while the Chinese government is cracking down on cryptocurrencies. While it is difficult to present an accurate volume of data because Chinese OTC transactions were peer-to-peer and used third-party payment platforms, the rise in the exchange rate between CNY and the popular stable currency tether (USDT) during the market shutdown reflects the whole story. This rise suggests that the Chinese sold all their cryptocurrencies in a panic after the crackdown, leading to higher exchange rates on these platforms and thus a drop in cryptocurrency prices worldwide. As a result, the price of bitcoin fell below $34,000 for the first time in three months. Prices subsequently recovered, suggesting that sales may have peaked as markets begin to consolidate. Bloomberg has suggested that OTC transactions may not pose the same capital risks as traditional transactions. Since the RMB portion of [OTC] transactions is conducted exclusively within the Chinese financial system, the risk of large-scale capital outflows is low, the report said.
China’s crackdown on cryptocurrencies mirrors the situation in late 2017, when the state first imposed a ban on cryptocurrency exchanges. It is believed that despite the repression, Chinese traders still account for the majority of global cryptocurrency trading, which is only facilitated by OCT platforms. In the end, the analysis still shows that 7% of the world’s bitcoin is owned by China. One of the main reasons for China’s fight against cryptocurrencies is environmental safety. The latest round of government restrictions is aimed at mining cryptocurrency as China seeks to meet its carbon neutrality goals. Several companies, including Huobi and OKEx, have suspended their local mining operations and mining services for Chinese customers. Lennix Lai, director of OKEx, said that while China has banned crypto currency exchanges and ICOs within its borders, it has not banned its citizens from owning digital currencies. People are allowed to mine bitcoins, they can transfer bitcoins to other people and pay in yuan, said Lai, who uses another name for the Chinese currency, adding that there are many locals and bitcoin believers in China. The Bitcoin network automatically adjusts the complexity about every two weeks, depending on the level of competition between miners. The lower the price, the less competition there is, indicating that many have already closed their factories.
What are the consequences of oppression?
The new restrictions make it harder for individuals to buy cryptocurrencies through different payment channels and could hurt miners’ businesses by making it harder to exchange cryptocurrencies for RMB. But banks and payment companies also face challenges in identifying money flows associated with cryptocurrencies. The Hong Kong Bitcoin Association tweeted about China’s ban on cryptocurrencies: For those who don’t know Bitcoin yet: The People’s Bank of China typically bans bitcoin at least once per rush.Chinese cryptocurrency traders are finding new ways to bypass the government’s crackdown on cryptocurrency exchanges by using the over-the-counter (OTC) market to buy and sell digital assets, a Bloomberg report said. Chinese regulators have shut down major cryptocurrency exchanges in the country, causing many traders to trade cryptocurrencies in small groups on overseas OTC desks, according to Bloomberg.. Read more about when does crypto market close and let us know what you think.
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