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In the face of China’s economic downturn and a sluggish stock market, Chinese investors are turning to the crypto market as a safer alternative to traditional investments, despite the government’s crypto ban.
Chinese citizens are finding creative ways to enter the crypto market, fueling a thriving underground industry.
According to a new report from Reuters, mainland investors can trade tokens like Bitcoin on platforms such as OKX and Binance, as well as engage in over-the-counter transactions.
Chinese citizens are also utilizing their $50,000 annual forex purchase quotas to move money into cryptocurrency accounts in Hong Kong, leveraging the territory’s open endorsement of digital assets.
As a result, the Chinese crypto market has experienced a surge in activity, with its global ranking in peer-to-peer trade volume skyrocketing from 144th place in 2022 to 13th place in 2023, according to crypto data platform Chainalysis.
Chinese Crypto Market Record $86B in Raw Transaction Volume
Despite the crypto ban, the Chinese crypto market recorded an estimated $86.4 billion in raw transaction volume between July 2022 and June 2023, surpassing Hong Kong’s $64 billion in crypto trading during the same period.
The report also revealed that the proportion of large retail transactions ranging from $10,000 to $1 million in China is nearly twice the global average of 3.6%.
Much of this crypto activity takes place through over-the-counter channels and informal peer-to-peer businesses in the grey market.
CHINESE INVESTORS TURN TO CRYPTO AMID ECONOMIC DOWNTURN
As China faces an economic downturn, investors turn to Bitcoin for safety and returns.
Crypto trading is banned in mainland China, but investors use creative methods such as using bank cards from rural banks and overseas… pic.twitter.com/iloqwFa0ga
— Crypto Town Hall (@Crypto_TownHall) January 25, 2024
The underground crypto market in China is thriving, with brick-and-mortar crypto exchange stores emerging in Hong Kong’s bustling business and shopping districts.
These offline shops operate with minimal regulations, enabling customers to purchase cryptocurrencies without providing identity documents.
Dealers facilitating digital asset purchases report daily volumes reaching millions or even tens of millions of yuan.
As traditional investment opportunities dwindle and Chinese stocks and assets underperform, Bitcoin’s price has soared by 50% since mid-October.
Despite the crypto ban, Chinese officials appear to recognize the disruptive potential of Bitcoin while acknowledging its significant growth prospects.
This is evidenced by their endorsement of crypto trading in Hong Kong, allowing China to maintain a foothold in the booming crypto business present in global financial centers such as Singapore and New York.
Tech Giants in China Push into Web3 Despite Country’s Ban on Crypto
Tencent and Huawei, two major Chinese tech giants, are making notable strides in the Web3 space despite the country’s stringent regulations on cryptocurrency trading.
As reported, Tencent and Huawei exhibited their booths alongside industry professionals at the Staking Summit in Istanbul, a two-day conference featuring top minds in proof-of-stake (PoS) protocols.
Over the past year, Chinese tech giants like Alibaba, Tencent, and Huawei have been increasingly visible in various crypto events worldwide, either as official sponsors or discreet attendees.
Although their participation lies at the intersection of Web2 and web3 due to China’s cryptocurrency ban, these companies are leveraging their computing resources to cater to web3 startups, similar to how they provide cloud services to established tech verticals.
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