Since Beijing’s announcement of tighter restrictions on cryptocurrency trading earlier this month, investors have found a workaround in over-the-counter and peer-to-peer transactions.
- According to a report by Bloomberg, the exchange rate between the Chinese yuan and Tether — which fell by 4.4% after the government’s announcement, but which has since recovered by more than half its loss — reflects sentiment amid the move to OTC and P2P transactions.
- The OTC and P2P crypto trades that Chinese investors are making involve two distinct steps, making them extremely hard to track. First, traders bid on digital coins on OTC platforms. When a buyer and a seller agree on an offer, the buyer uses a different payment platform to settle the transaction. Connecting the two steps is almost impossible for authorities.
- The rise of local OTC platforms and P2P networks as alternatives means it’s more challenging for Chinese regulators to ban digital coins entirely, bringing relief to many crypto traders in and outside of China.