Chinese Investors Find Workarounds To Crypto Ban, Demand Remains Strong After 19 Months


Bloomberg reported that nineteen months after the Chinese government banned crypto-related transactions, there is increasing evidence that citizens continue buying and selling digital assets. While the ban was intended to curb investments in digital assets, the ban has proven to be ineffective. It has led some people to seek alternatives to traditional investments like property and stocks.

Source: Chainlink

Despite the ban, Chinese demand for crypto assets continues to exist. The evidence of ongoing Chinese appetite for tokens comes from varied sources, including data from FTX’s creditor profile, citizens who said they used crypto platforms, and depictions by industry insiders of workarounds to Beijing’s ban. In addition, US bankruptcy filings for FTX, which collapsed in November last year, show that Chinese users accounted for 8% of the exchange’s customers.

Source: Bloomberg

The ban on digital assets has been difficult to enforce due to the decentralized nature of cryptocurrencies and the fact that they can be transferred peer-to-peer and traded on global exchanges. Bans have been proven to be ineffective in the past, as they can be difficult to enforce and can lead to the creation of workarounds.

The Chinese government banned digital assets over concerns about money laundering, currency outflows, and the environmental impact of Bitcoin mining. The ban has led to a compliance challenge for crypto platforms, which now try to block Chinese Internet Protocol addresses. However, virtual private networks can defeat such attempts by masking locations.

If the crypto sector were legalized in China in the future, it would likely lead to a surge in cryptocurrency demand. However, there are no indications that the ban will be lifted anytime soon.

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