Chinese Residents Turn to Cryptocurrencies Despite Bans
Residents of China are finding creative ways to convert their savings into cryptocurrencies like Bitcoin (BTC) and other prohibited crypto assets. Despite strict controls and bans on cryptocurrency in mainland China, people are still able to trade tokens through crypto exchanges such as OKX and Binance or by using over-the-counter channels. Additionally, Chinese investors can open overseas bank accounts to purchase crypto assets.
The economic downturn in China has made investing on the mainland risky and disappointing, leading people to seek offshore options. As an anonymous senior executive at a Hong Kong cryptocurrency exchange revealed, mainland investors are entering the market regularly.
China’s History with Crypto
In 2017, China closed its local cryptocurrency exchanges, effectively shutting down the speculative market that accounted for 90% of global bitcoin trading. Then, in September 2021, the Chinese government implemented a complete ban on all cryptocurrency transactions.
However, despite these government actions, residents of mainland China have continued to actively participate in the crypto space. Chainalysis experts have noted that China may be using the Hong Kong market as a testing ground for future approaches to cryptocurrencies.
Hong Kong’s Role in Crypto Transactions
From July 2022 to June 2023, Hong Kong ranked fifth globally in terms of cryptocurrency transaction volume, with approximately $64 billion. This ranking placed Hong Kong behind South Korea, Japan, China, and Taiwan. Despite having only 0.5% of mainland China’s population, Hong Kong’s transaction volume is comparable due to large institutional transactions exceeding $10 million.
Hot Take: Chinese Investors Seek Crypto Opportunities Amidst Bans
Despite the ban on cryptocurrencies in mainland China, Chinese residents are actively finding ways to invest in crypto assets. The economic downturn and restrictions on capital movement have pushed people to explore offshore options, such as utilizing crypto exchanges and opening overseas bank accounts. While the Chinese government has attempted to curb crypto activities, residents continue to participate in the crypto market through channels like Hong Kong. This demonstrates the persistent demand for cryptocurrencies among Chinese investors. As the landscape evolves, it will be interesting to see how China adapts its approach to digital assets.
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