WSJ: Chinese market accounted for 20% of Binance’s trading volume

The volume of trades executed by Chinese traders on Binance in May 2023 reached $90 billion, accounting for one-fifth of the exchange’s total figures. The Wall Street Journal reports this, citing internal data The Wall Street Journal.

The publication recalled the platform’s exit from the local market in 2021 after the ban on cryptocurrencies.

Against the backdrop of regulatory crackdowns in several countries, maintaining a presence in China “will be critical for the company.” The matter is openly discussed among employees, according to sources.

Despite the ban on digital assets, Binance works closely with Chinese law enforcement authorities to identify potential criminal activity among more than 900,000 active users.

“Covert” presence offers insight into how the platform managed to operate discreetly on the fringes in places where this is, at least officially, unwelcome, the WSJ noted.

According to an internal document, Binance gave Chinese users guidance on bypassing restrictions, before redirecting them to the global exchange. The practice was active after the platform’s website was blocked in 2017 until authorities declared all crypto transactions illegal in 2021.

At that time the company said it was transferring client accounts to “withdraw-only” mode, citing compliance with local regulators.

There was no full winding down of digital-asset trading activity.

Kim Grauer, Director of Research at Chainalysis, told the publication that the country is the fourth-largest crypto-trading market — substantial volumes pass on both CEX and DEX.

The WSJ noted Huobi’s recommendations to Chinese users about obtaining Dominican Republic citizenship to continue operations.

CEO Changpeng Zhao was the initial promoter of a similar programme in Palau. Binance subsequently scrapped the project.

A popular solution remains using VPN services.

According to sources, Binance’s share of the Chinese market in 2021 fell from 24% at the time of the ban to 17%. In 2022 the situation levelled out, and by May 2023 the monthly turnover reached $90 billion.

The bulk of trading was tied to cryptocurrency futures. Currently the exchange has 5.6 million users from China, including 911,650 active customers.

The second-largest market for Binance is South Korea with 13% share, followed by Turkey with almost 10%. In other countries the indicator does not exceed 5%.

Around 100,000 Chinese Binance users as of January were classified as “politically exposed persons,” according to sources.

Such status is tagged by banks and regulators to officials, their relatives or close associates, who require closer scrutiny due to the heightened risk of involvement in corruption or money laundering.

In December 2022, the U.S. Senate stated about close ties between the exchange and the Chinese government.

Earlier Zhao said that Binance cannot be called “a Chinese company”, as it “has never been incorporated in the Middle Kingdom.” Zhao regards himself as Canadian.