Chinese crypto investors have reportedly been bypassing regulatory hurdles recently by being active on domestic and foreign over-the-counter (OTC) platforms and peer-to-peer (P2P) networks. Bloomberg stated that China’s recent crackdown escalation has fueled such transactions, making it complicated for the authorities to strengthen a massive ban on cryptocurrencies at all.

The activity in the OTC desks has spiked significantly since May 18, where the Communist Party of China issued some statements to reinforce its stricter stance against virtual currencies. Crypto exchanges have been banned in the country since 2017, being the first crackdown deployed by the government.

Looking Forward to Meeting You at iFX EXPO Dubai May 2021 – Making It Happen!

“I don’t care,” Charles, a 35-year-old real estate consultant in Shanghai who used such a pseudonym, told Bloomberg about the losses triggered by the crackdown. In fact, he has been buying cryptos since 2017 while other Chinese investors are still believed to use OTC platforms and P2P networks to access the market through virtual private networks (VPN).

“The first happens on OTC platforms operated by firms, including Huobi and OKEx, which allow traders to post bids and offers. Once both sides agree on a price, the buyer will use a separate payments platform, operated by their bank or a fintech company like Ant Group Co., to send yuan to the seller,” Bloomberg described the way how such OTC desks operate.

Additionally, cryptos are held in an escrow by the platform until the yuan payment clears. These are then transferred to the buyer, bypassing Chinese regulators.

Crypto Mining Crackdown in China

Still, the Chinese government’s strict stance on cryptos is far from being eased upon.

In a Financial Stability Committee of the State Council meeting held last Friday, China’s Vice Premier, Liu He, mentioned that the country would clamp down on cryptocurrency mining and trading activities. “We should crackdown on bitcoin mining and trading activities and prevent individual risks from being passed to the whole society,” he said.