Savvy Chinese Crypto Traders Are Maneuvering Banning Regulations Using Tether And VPNs
Traders in China Get Around Regulations and Keep Trading Cryptocurrencies
Chinese investors will always find new ways to keep trading virtual currencies. The government has tightened controls on crypto trading activities and it is quite difficult nowadays to trade in the virtual currency market.
The Shanghai Securities Times, an important newspaper that is in line with the country’s financial regulators, reported that authorities are increasing their surveillance on trading platforms. For example, they are monitoring and blockchain more than 100 off-shore cryptocurrency exchanges that provide services to Chinese users.
Crypto exchanges tried to circumvent the local ban by changing domain names and also by moving abroad. In the short term, experts believe that this decision by the government would affect trading activities. Nonetheless, in the long term, it is almost impossible for the government to block the access to foreign exchange platforms.
Terence Tsang, chief operating officer of TideBit, commented on the matter:
“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.”
The pages that have been regulated and blocked were those written in Chinese.
According to the South China Morning Post, seven exchanges popular among Chinese investors experienced a 33% drop on their trading volume. The handled a $2.5 billion dollars trading volume compared to $3.73 on August 16. After the warning issued by the government, the volume plummeted.
However, important industry players said that it will be very difficult for regulatory authorities to keep the control in these platforms and block the access. Several retail traders convert their yuan into the famous stablecoin Tether (USDT) and move the funds to crypto exchanges that support USDT trading pairs.
Tether has been involved in different controversies during the last year due to the fact that it has not conducted a proper audit regarding the funds it manages.
According to the Chinese newspaper, the money is transferred through bank accounts between individuals that want to transact virtual currencies. Once the funds (Tether) are received, it is possible for traders to enter a crypto exchange using virtual private networks and start trading virtual currencies.
A source explained that Chinese regulators are able to shut down VPNs that allow users transact in crypto-to-crypto exchanges.
At the moment, there are no restrictions about using VPNs in the country, something that allows traders to find the way to interact with the cryptocurrency world.
As per the Shanghai Securities Times, regulators work with third-party payment companies to stop processing transactions that are associated with virtual currencies. Tencent and Alibaba Group’s affiliate Ant Financial, said that they are going to restrict and ban accounts related to cryptocurrency transactions. However, some important players in the space are skeptical about how to identify these accounts.