With a year into stamping out cryptocurrency business in the country, Chinese crypto traders have a found a way to render the government ban powerless. This has allowed digital currency trading to continue despite China imposing a ban on the same on September last year.
The traders and crypto businesses have moved their “trading platforms’ servers” outside China. Experts have indicated that as long as this remains “and transactions are conducted peer-to-peer and remain decentralized, it would be a huge challenge for the regulators to completely block access.”
According to South China Morning Post, financial regulators in the country have started monitoring more than 100 cryptocurrency exchanges claiming to be located outside China and which “provide trading services to Chinese investors.” A variation in domain names has also been used by these exchange allowing them to operate under the radar.
Terence Tsang, COO, TideBit, a Hong Kong-based digital currency exchange noted that:
“The latest warning and potentially increased monitoring of foreign platforms is targeted at a batch of smaller exchanges that had claimed to be foreign entities, but are in fact operating in China claiming they have outsourced their operations to a Chinese company.”
Chinese financial watchdogs are now concentrating their energies on exchanges that are using the Chinese language on their websites.
Traders in the country utilize Tether which they exchange for the yuan. They then trade as if from person to person with the exchange playing the role of an ‘overseer’ and ready to ‘adjudicate in cases of failed trades or transactions that are not honored.’
Money is then transferred through 3rd party payment networks or banks between the individuals. The traders use VPN (Virtual Private Network) to conceal their identities on the web.
Although the Chinese government has the power to prohibit the use of VPNs, there are no ‘current or even foreseeable restrictions.’ This provides a way for the traders to reach cryptocurrency exchanges.
Even if the government decides to clamp down on the use of VPNs it will have to reach a consensus with other stakeholders which lengthens the process and a consensus is not guaranteed.
Do you think the Chinese crypto traders’ way to render the government ban powerless will be hard for the government to interfere with?
Let us know your thoughts in the comments section below.
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