Chinese Cryptocurrency Traders Continue to Dodge Official Controls

0
15

Cryptocurrency traders in China will continue to find ways to dodge the increasingly strict controls applied by financial authorities unless Beijing implements a complete shut down of virtual private networks (VPN’s) according to industry observers.

Chinese tech giants including Baidu, Alibaba and Tencent shut down blockchain and cryptocurrency-related social media platforms at the end of August and the start of September, as Beijing stepped up its crackdown on cryptocurrency trading.

Beijing’s campaign against cryptocurrencies kicked off in earnest in September 2017, with the launch of a ban on initial coin offerings (ICO’s) and cryptocurrency financing, as well as efforts to close domestic exchanges.

Industry observers say that the efforts of regulators have failed to bring a complete end to cryptocurrency transactions in China however, with domestic traders and exchanges proving highly adept at dodging restrictions.

Chinese exchanges have sidestepped bans by adopting new domain names, shifting their servers to locations outside of China, as well as registering offshore legal entities.

“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,” said Terence Tsang, chief operating officer of cryptocurrency-exchange operator TideBit, according to a report from the South China Morning Post.

“Those exchanges whose website landing pages are in Chinese have drawn particular scrutiny by regulators.”

Sources say that it will prove extremely difficult for Chinese regulators to completely shut down access to cryptocurrency trading platforms as long as their servers are situated overseas and traders can conduct decentralised peer-to-peer transactions.

Chinese traders often employ “client to client trades” for their cryptocurrency transactions, which involves them first purchasing the comparatively stable Tether cryptocurrency using renminbi funds via an exchange that plays the role of overseer.

The traders can then use Tether for crypto-to-crypto transactions, by accessing exchanges via virtual private networks (VPN’s).

While the Chinese government has the ability to shut down VPN’s, analysts say that reaching a consensus on new firewall configurations would entail a protracted process involving multiple stakeholders.

Related stories

Baidu, Alibaba and Tencent Leap Aboard Beijing’s Cryptocurrency Crackdown 

WeChat Continues to Shut Blockchain and Cryptocurrency Social Media Accounts 

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here