Despite Beijing’s ever-increasing crackdown on the crypto industry, there are still some signs of life in the People’s Republic of the Bitcoin network and OTC trading.
China stepped up its crackdown on crypto last week to suppress any remaining digital asset-related activity within its borders. The regime specifically targeted crypto transactions, but as researched by Cointelegraph, this move is nothing new, with at least 19 similar raids in the last decade or so.
Despite the recent move, there are still 135 Bitcoin nodes operating in China, according to Bitrawr, which measures nodes by geographic location. However, this is only 1.21% of the total of 11,262 Bitcoin nodes distributed across the planet. There can be more if they run behind virtual private networks (VPNs) and / or use onion routing with Tor masking locations
Bitcoin nodes are the software that runs the log and contains the full ledger or a segment of it that contains a history of the transaction data. Distributed and decentralized systems are specially designed to be difficult to shut down completely, so the regime may struggle to clear out those last-minute followers or those operating through Tor.
While its opaque nature makes it difficult to quantify the volume, over-the-counter (OTC) trading is also holding a foothold in China, as is the local currency pair, according to various reports.
Local media company Wu Blockchain reported that the RMB / USDT pair, which is still offered by major exchanges like OKEx and Huobi, is trading at a premium. He noted panic selling last week that has since subsided.
OKEx is currently offering 6.35 yuan for 1 USDT, with the actual exchange rate for a greenback being 6.47 according to XE.com.
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OTC trades are conducted peer-to-peer, which circumvents the use of a bank or the spot markets on centralized exchanges – although many exchanges have appropriate OTC desks. According to Coindance, the volumes in China have been relatively stable since the beginning of 2020, with around 7 million yuan (around 1 million US dollars) being traded per week on the P2P platform Localbitcoins.
Former CEO of China’s first crypto exchange, BTCC, Bobby Lee believes Beijing will target OTC counters in its next crackdown. Earlier this week, he said that OTC platforms operated by the major exchanges will be closed or forced to ban Chinese users. Lee. speaks to Bloomberg on Sep 29 added:
“They really don’t want loopholes where people can use digital currency as a vehicle to move assets overseas.”
He followed suit by predicting that BTC markets await another FOMO rally that could push prices to $ 200,000.