Enhanced cryptocurrency restrictions enforced by China
In a recent move, the State Administration of Foreign Exchange (SAFE) in China has introduced new regulations aimed at tightening the noose around cryptocurrency activities within the country. The new rules are designed to make it more challenging for Chinese citizens to bypass the country's currency controls using cryptocurrencies.
One of the key aspects of these regulations is the prohibition of Bitcoin trading exchanges in China. However, Chinese citizens continue to use peer-to-peer (P2P) platforms like OKX, Binance, Huobi P2P, LocalBitcoins, and others to buy cryptocurrencies. These platforms, known for direct user-to-user trading, are accessible with VPNs within China. Additionally, platforms like Best Wallet, MEXC, and Bybit also offer P2P crypto trading options that may be used by Chinese users despite the restrictions.
Beijing is taking a draconian approach to eradicate commercial crypto activities such as trading and mining Bitcoin within China. Banks in China are now required to monitor and report risky transactions involving cryptocurrencies, underground banks, or gambling. SAFE demands that banks identify the institutions and individuals involved, the sources of funds, and the frequency of trading, and prevent risky transactions if identified.
Despite the bans, Bitcoin continues to be used and traded in China, demonstrating its status as a true global currency. The unstoppability of Bitcoin is evident, as it remains accessible to everyone, even in the face of authoritarian governments.
China's new regulation also aims to provide another legal basis to punish cryptocurrency trading. The sale of tokens via Initial Coin Offerings (ICOs) is already banned in China. Mining and any other activity related to crypto is also prohibited in China.
However, the continued mining of Bitcoin in China, accounting for 21 to 54 percent of the global hashrate, is a testament to the resilience of the cryptocurrency. Part of the continued mining in China is due to legal loopholes and the toleration of illegal mining by corrupt authorities.
China has banned Bitcoin in various ways multiple times, but the cryptocurrency continues to find a way. The new regulation aims to eliminate the fiat part of the P2P equation, but it is likely that Bitcoin will find alternative means to continue.
Despite the challenges, Chinese citizens have found innovative ways to smuggle over $250 billion out of China illegally in 2024, with cryptocurrencies being a significant tool in this process. The vital gray market that exists in China continues to allow Chinese citizens to buy and trade cryptocurrencies, which they then trade on foreign exchanges or Decentralised Finance (DeFi) platforms.
In conclusion, while China continues to impose strict regulations on cryptocurrency activities, the resilience of Bitcoin and the ingenuity of its users ensure that it remains a global currency, accessible to all.
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