Against the backdrop of repressive measures by Beijing against trading digital assets in mainland China, the popularity of P2P exchanges and paid verification services on overseas cryptocurrency exchanges has risen. This was reported by Dovey Wan, managing partner at Primitive Ventures.
Mainland China 🇨🇳 crypto situation TL;DR 🧵
🥲 Retail traders: much stricter access to all CEXs asmost shutdown Chinese KYC retroactively. But loophole exists since paid KYC (to bypass country’s restriction) is a common service already. So KYC hurdle will impact boomer retail …
— Dovey “Rug The Fiat” Wan🪐🦖 (@DoveyWan) October 14, 2021
In September, the People’s Bank of China, together with nine agencies, issued a statement, in which cryptocurrency operations were classified as illegal financial activity. According to Wan, most Chinese CEX closed access to local users retroactively.
\”But there is a loophole, since paid KYC (which allows bypassing government restrictions) has already become a common service. Only boomer traders who are not as technically savvy (don’t know how to use VPN) or can’t access paid services due to language or other information barriers,\” she explained.
Since the introduction of cryptocurrency trading restrictions in the country, there has been a surge in the popularity of P2P exchanges. Wan noted that market makers coordinate their activity in Telegram channels, staging \”self-organised OTC trades\”.
🏦 Fiat on off ramp:
retreat back to a \”localbitcoin\” style, smaller P2P. many TG groups already spin out for such self serve service, like any self organized OTC without central party involved
Low efficiency but doable, wherever there’s the spread there will be market maker
— Dovey \”Rug The Fiat\” Wan🪐🦖 (@DoveyWan) October 14, 2021
\”With low efficiency, but [the scheme] works — wherever there is a spread, there will be market makers\”, Wan added.
According to her, government measures \”had minimal impact\” on institutions, which ceased cooperating with CEX such as Huobi and OKEx after the May crackdown.
💼 Institutions: no to minimal impact, most already quit Huobi/Okex etc since May ban
🔨Miners: exited, alive& well outside mainland. those who built mining warehouse facility in mainland tho (not actually owning the rigs but just charge hosting/collocation fee) are rekt hard
— Dovey \”Rug The Fiat\” Wan🪐🦖 (@DoveyWan) October 14, 2021
\”If we talk about miners, they are alive and well outside Mainland China. Those who built mining data centres (not actually owning the rigs, but simply charging for hosting) were the ones who suffered,\” Wan wrote.
The tightening of regulation has heavily affected operators of centralised platforms, but scarcely affected the teams behind decentralised products.
Wan believes that local engineers in the digital assets and blockchain space will continue to work on creating software products, but will do so anonymously.
Earlier in October, it was reported that the Chinese government planned to pursue legal action against crypto trading and mining. in order to pursue legal action cryptocurrency trading and mining.
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