Since the last restriction, the exchange rate between the yuan and Tether decreased to 4.4%. Since mid-May, transactions of almost USD 1 trillion in cryptocurrencies have been estimated in China.
After China’s financial institutions recently prohibited the use of bitcoin (BTC) and cryptocurrencies in all payment services, mutual funds, and savings, their use clandestinely increased, according to some reports. The Chinese government sees crypto assets as a risk because they are not receiving support from a real value, and because of their constant volatility in the market.
Cryptocurrency over-the-counter platforms have exploded in a vast part of the Asian nation, these platforms got installed when national exchanges were banned. According to Bloomberg agency, these kinds of platforms, which operate clandestinely, have seen a big increase in their operations since then.
Since early May, when this ban appeared, it has become an indicator among the population that the exchange rate between the Chinese yuan and the stablecoin Tether, crumbled down as much as 4.4%. Following this warning from local authorities, there is a recovery of more than half of the loss, according to crypto data platform Feixiaohao, which is a Chinese equivalent of CoinMarketCap.
This measure created a rise in the proliferation of local OTC (Over The Counter) platforms, which can count as “over-the-counter”, as well as peer-to-peer (P2P) networks. Due to the difficult-to-trace nature of these platforms, it can be a hard task for local authorities to enforce a wholesale prohibition.
According to the US news agency, There is some kind of relief for cryptocurrency enthusiasts worldwide after concerns about a drop in the sale of BTC in the Asian nation appeared. According to data recorded by the news agency, almost USD 1 trillion in digital assets have been negotiated in China since mid-May.
Losses and the Repression of Cryptocurrencies
About the losses resulting from the recent price drop and about the censorship of cryptocurrencies in China, Blomberg led a consult to a man that expressed his lack of interest in such matters. He also assured that he has been purchasing cryptocurrencies since 2017 and claimed to have lost $ 11 million in three days in the recent pullback.
The exchange ban has made those figures impossible to measure, but Chinese investors are still famous for having a relevant presence in the crypto world through domestic OTC platforms and exchanges from other sectors that they have access to, like virtual private networks.
China Has Banned Bitcoin at Least Seven times
Since 2013, the Asian nation has banned at least seven times every single operation, commercialization, or promotion of bitcoin, and other cryptocurrencies.
The Asian giant keeps having a tight relationship with BTC as a cryptocurrency but has been more flexible in terms of digital mining. However, this latter aspect of the industry is also beginning to change with new provisions in the Mongolia region.
The restrictions that China recently applied on trades with bitcoin and other cryptocurrencies could impact business innovation in the Asian country, estimated Sheila Warren, who led, in May 2021, the World Economic Forum topics regarding blockchain and digital assets.
By: Jenson Nuñez