Residents of China have begun actively converting their savings into cryptocurrencies, using creative ways to own Bitcoin (BTC) and other crypto assets prohibited in the country.
According to Reuters, although cryptocurrency is banned in mainland China and there are strict controls on the movement of capital across borders, people can still trade tokens such as Bitcoin on crypto exchanges such as OKX and Binance or through other over-the-counter channels. In addition, Mainland China investors can also open overseas bank accounts to purchase crypto assets.
Following Hong Kong’s open approval of digital assets last year, Chinese citizens use their annual $50,000 currency purchase quota to transfer money into cryptocurrency accounts in the territory.
As a senior executive at a Hong Kong cryptocurrency exchange, who wished to remain anonymous, explained, the economic downturn in China has made investing on the mainland risky, uncertain and disappointing, so people are looking to place assets offshore.
“Almost every day, mainland investors come into this market.”
Anonymous senior executive at a Hong Kong crypto exchange
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In 2017, China closed its local cryptocurrency exchanges, stifling the speculative market that accounted for 90% of global bitcoin trading. In September 2021, the Chinese government introduced a complete ban on all cryptocurrency transactions.
However, government bans did not prevent residents of mainland China from remaining active crypto users, as Chainalysis experts previously said. According to them, China can use the Hong Kong market as a “testing ground for rapprochement with cryptocurrencies.”
Thus, from July 2022 to June 2023, Hong Kong took fifth place in the volume of cryptocurrency transactions, with an indicator of about $64 billion. It was second only to South Korea, Japan, China and Taiwan. Analysts emphasized that Hong Kong’s indicators are comparable to those of China, but the region’s population is 0.5% of the population of mainland China. In the administrative area, a large share of the volume comes from large institutional transactions of $10 million or more.
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