Chinese Crypto Traders have since found an alternative after the government banned the trading of cryptos. The crypto investors have resulted in using the virtual private networks (VPNs) as well as Tether.
Chinese Crypto Traders Bypassing the ban
Chinese Crypto Traders are circumventing the government’s ban on crypto trading through Tether and VPNs. Industry experts explained that regulators are unable to completely block decentralized and peer-to-peer transactions.
China’s regulatory authorities moved to ban Initial Coin Offerings (ICOs) as well as local trading of cryptos. Beijing monetary policymakers were concerned of the citizens increased tendency to gamble. Consequently, the People’s Bank of China announced the blocking of foreign digital currency exchanges and ICO online sites. This was aimed at fully eliminating the trading of cryptocurrency and all mining activities in the nation.
According to South China Morning Post report, many traders are converting fiat currency into Tether, which is a stable coin. Subsequently, they directly exchange it across the digital currency wallets. So as to protect the identity of a trader, online transactions are done via a VPN. Through the scheme, Chinese traders take advantage of VPNs to access any crypto exchange they choose. Hence, they trade in virtual currencies similarly to the countries where crypto trading is legal. Meaning, traders are able to bypass the restrictions by the Chinese regulators.
Authorities yet to shut down VPNs
The Chinese government is yet to shut down the VPNs. An unnamed source familiar to the matter disclosed “Chinese regulators definitely have the technical ability to shut down VPNs. However, traditionally it takes numerous conversations with different stakeholders to reach a consensus on configuring a firewall, which lengthens the process.”
Nevertheless, firms like Tencent that they intend to ban accounts and block transactions related to digital currency trading. Although, the firm did not explain how it will identify such accounts or even transactions.
In spite of, the ban, Chinese exchanges are transferring servers outside of China and registering their businesses offshore. Others are translocating their businesses overseas and operating under changed domain names. As a result, they continue running exchanges despite the ban.