[2018-01-27] How Chinese Bitcoin Buyers Are Getting Around Government Ban

[cybersofts]

How Chinese Bitcoin Buyers Are Getting Around Government Ban




Chinese citizens are still investing in Bitcoin and the cryptocurrency market despite the government’s heavy crackdown.

In September 2017, Chinese cryptocurrency exchanges BTCC China, Huobi and OKCoin were ordered by the government to shut down their businesses. At one point, executives of the three cryptocurrency exchanges were prevented from leaving the country, due to a government investigation into local cryptocurrency exchanges.

Three months later, in December of 2017, China’s three largest cryptocurrency exchanges relocated their businesses to Hong Kong. BTCC China, Huobi and OKCoin rebranded to BTCC, Huobi Pro and OKEx, respectively. They intended to address the rapidly growing demand from Hong Kong-based investors.

Shortly after their move, the three trading platforms started to see daily volumes from Chinese investors grow exponentially. Somehow, Chinese investors were managing to circumvent Chinese trading restrictions by using Hong Kong-based exchanges. How is this possible?

In Hong Kong, it is relatively easy for investors to set up businesses. With less than $1,000, businesses can be legally created, which allows the opening of business bank accounts at Hong Kong-based financial institutions. Beginning in December 2017, many Chinese investors moved their funds from their Chinese bank accounts to Hong Kong bank accounts and started to trade cryptocurrencies more actively, effectively bypassing China’s restrictions.

But, unlike China, Hong Kong has a substantially lower supply to meet the growing demand. While China is home to major miners like Bitmain, Hong Kong does not produce much Bitcoin and other cryptocurrencies. As such, premiums in the Hong Kong cryptocurrency market increased, surpassing even that of the South Korean market. On January 18, when the global average price of Bitcoin was around $11,500, Bitcoin was being traded at above $13,000 on Huobi Pro.

Krystal Hu, a Hong Kong-based finance journalist, noted that traders outside of China have also started to take advantage of the arbitrage opportunity presented by the Hong Kong market. For instance, on January 18, the price of Bitcoin on Coinbase was $11,800. Purchasing Bitcoin from Coinbase and selling it on any Hong Kong-based market would have generated $1,200 in profit.


Chinese Government Concerned

Hong Kong’s exchanges have also integrated widely-used fintech applications in China such as Alipay and Tencent’s WeChat Pay. Alipay is a $60 billion fintech app that is used by more than 50 percent of mobile users. WeChat Pay, which was only used by seven percent of mobile users in 2014, is now being used by more than 40 percent of mobile users in China.

The integration of the two fintech payment networks has increased the accessibility of Hong Kong-based cryptocurrency OTC exchanges for Chinese investors, easing the process of investing in the cryptocurrency market.

To prevent Chinese investors from buying digital currencies, the Chinese government and the People’s Bank of China (PBoC), have asked local banks to disclose any suspicious transactions linked to Hong Kong-based markets. However, even this action will not be able to prevent Chinese investors from accessing Hong Kong-based markets, due to apps such as Alipay and WeChat Pay.


Source: https://cointelegraph.com/news/how-chinese-bitcoin-buyers-are-getting-around-government-ban

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[1Referee]

China has to accept that you simply can't prevent people from investing in Bitcoin. One way or another, there will always be a way for people to trade Bitcoin, even when it's not as convenient as trading on an exchange. I seriously hope that decentralized exchanges will become the norm in the coming years, because people for once need to understand how annoying and unworkable centralized exchanges are getting due to all the regulations. I have taken a look into some of the more popular decentralized exchanges, but it's still more or less a hassle and time consuming practice to settle trades. I hope that atomic swaps will be able to bring the necessary convenience people need in order to take decentralized exchanges more serious.

[Slow death]

To prevent Chinese investors from buying digital currencies, the Chinese government and the People’s Bank of China (PBoC), have asked local banks to disclose any suspicious transactions linked to Hong Kong-based markets. However, even this action will not be able to prevent Chinese investors from accessing Hong Kong-based markets, due to apps such as Alipay and WeChat Pay.

I was wondering how long the Chinese would give up buying and selling bitcoin and the most incredible and seeing the Chinese government struggling to keep the law when those same Chinese do not respect the laws of other countries and when those Chinese are in the others countries do everything to steal the natural resources of that same country, such as forests, poaching, illegal fishing are preferred by the Chinese. see the Chinese government persecute people who use bitcoin is a shame, the chinese government should worry about clean your image around the world

[Hell-raiser]

China has to accept that you simply can't prevent people from investing in Bitcoin. One way or another, there will always be a way for people to trade Bitcoin, even when it's not as convenient as trading on an exchange. I seriously hope that decentralized exchanges will become the norm in the coming years, because people for once need to understand how annoying and unworkable centralized exchanges are getting due to all the regulations. I have taken a look into some of the more popular decentralized exchanges, but it's still more or less a hassle and time consuming practice to settle trades. I hope that atomic swaps will be able to bring the necessary convenience people need in order to take decentralized exchanges more serious.

For that we would first need LN activated in Bitcoin because it still remains the number 1 cryptocurrency, the king of coins. Decentralized exchanges would be annoying unless you can make instant trades. But instant trades aren't possible without instant transactions. That should be abundantly clear. Once these are implemented via LN or otherwise along with atomic swaps, decentralized exchanges will be a preferred way of trading because there will no more front-running, artificial delays, and a lot of other unfair tricks which centralized exchanges are so famous of.

[Balmtand]

China has to accept that you simply can't prevent people from investing in Bitcoin. One way or another, there will always be a way for people to trade Bitcoin, even when it's not as convenient as trading on an exchange. I seriously hope that decentralized exchanges will become the norm in the coming years, because people for once need to understand how annoying and unworkable centralized exchanges are getting due to all the regulations. I have taken a look into some of the more popular decentralized exchanges, but it's still more or less a hassle and time consuming practice to settle trades. I hope that atomic swaps will be able to bring the necessary convenience people need in order to take decentralized exchanges more serious.

For that we would first need LN activated in Bitcoin because it still remains the number 1 cryptocurrency, the king of coins. Decentralized exchanges would be annoying unless you can make instant trades. But instant trades aren't possible without instant transactions. That should be abundantly clear. Once these are implemented via LN or otherwise along with atomic swaps, decentralized exchanges will be a preferred way of trading because there will no more front-running, artificial delays, and a lot of other unfair tricks which centralized exchanges are so famous of.

How long will the LN will available formally? I know it is launched by some users. Before the wide spread use, I will not use it.

[Hell-raiser]

China has to accept that you simply can't prevent people from investing in Bitcoin. One way or another, there will always be a way for people to trade Bitcoin, even when it's not as convenient as trading on an exchange. I seriously hope that decentralized exchanges will become the norm in the coming years, because people for once need to understand how annoying and unworkable centralized exchanges are getting due to all the regulations. I have taken a look into some of the more popular decentralized exchanges, but it's still more or less a hassle and time consuming practice to settle trades. I hope that atomic swaps will be able to bring the necessary convenience people need in order to take decentralized exchanges more serious.

For that we would first need LN activated in Bitcoin because it still remains the number 1 cryptocurrency, the king of coins. Decentralized exchanges would be annoying unless you can make instant trades. But instant trades aren't possible without instant transactions. That should be abundantly clear. Once these are implemented via LN or otherwise along with atomic swaps, decentralized exchanges will be a preferred way of trading because there will no more front-running, artificial delays, and a lot of other unfair tricks which centralized exchanges are so famous of.

How long will the LN will available formally? I know it is launched by some users. Before the wide spread use, I will not use it.

I really don't know. In the very least we need it supported in major wallets like Electrum and Bitcoin-qt. I don't use personal wallets for Bitcoin since I'm mostly in altcoins these days, but as I heard (correct me if I'm wrong on this), there were quite a few issues with SegWit in these wallets. It took some before it was fully enabled, and I think for a technology by far more complex than Segregated Witness, it would require even more time. And don't ask me about decentralized exchanges because we should have had them yesterday already.

[J. Cooper]

I'm loving the way how these Chinese investors are out playing the ignorant government. You can't simply try to put a hold to something this revolutionary as cryptocurrency. The article only demonstrates that the market will always find it's way to do business regardless of what the Chinese government has to say. You ban crypto? Sure, we cut all ties with the country and move elsewhere and do business over there. It's that simple.

[akamit]

China has to accept that you simply can't prevent people from investing in Bitcoin. One way or another, there will always be a way for people to trade Bitcoin, even when it's not as convenient as trading on an exchange.

That's correct, China can't prevent their citizens from investing in Bitcoin. It is because every law has loopholes and peoples will get over it.
Every citizens of those countries (who banned cryptocurrency) are still in the crypto world, one way or another, they will stay forever.
Nothing can stop those guys who once stepped into crypto world. Bitcoin/cryptocurrency is the precious thing in the world now, who will let it go easily?

[iRakic]

I really don't understand why the governments of the world are making this bans when they know that the future of trading and economy lies in the cryptocurrencies. People want to invest and they will do it, in China, if not there, in Hong Kong, if not there, then anywhere in the world. This is just an example that product will always find a way to meet its demand. It is just that simple.

[Stegobit]

I really don't understand why the governments of the world are making this bans when they know that the future of trading and economy lies in the cryptocurrencies.

Because governments know cryptocurrencies are death for them in the long term! Bitcoin is unstoppable!

[vit05]

Former director at Institute of Financial Sciences, China's Ministry of Finance: It's impossible to truly ban bitcoin. We must pay close attention to the blockchain technology.
http://finance.ifeng.com/a/20180127/15951366_0.shtml

 China Internet Finance Association issued a reminder on the prevention of foreign ICO and "virtual currency" transactions and urged investors to recognize the risks of offshore ICO and "virtual currency" trading platforms.

At the Davos World Economic Forum held in the same period, bitcoin and blockchain have also become the hot topics discussed by economists and politicians from all over the world.

On the same day, Jia Kang, former director of the Institute of Fiscal Science at the Ministry of Finance and Dean of Huaxia New Supply Economics Institute, told the Fenghuang Wang Financial News at the 2017 China Financial Annual Forum that China has adopted a relatively harsh attitude toward Bitcoin. The exchange is now being Prohibited. He said that in a sense only the gesture of the Chinese government, but Bitcoin and International Unicom transactions still exist, it is impossible to truly ban Bitcoin because it can be traded as long as it can access the Internet.

As for Bitcoin's underlying technology "blockchain," he said it must be taken seriously that the blockchain is an irreversible historical trend. Some far-sighted organizations should quickly use the blockchain to innovate and develop according to their own situation.

Jia Kang also talked about the sale of the same rights, he believes that the same rights to rent and lease should first be in the "two days of fire and ice" property market fire to implement. It is also more urgent for renters to get equal access to public services such as their children on the same level as those who own homes. It is also more urgent to implement a compliance-oriented approach on this side of the fire. After the sale of the same rights, the school district room will not break the sky high price.

[Qartersa]

How Chinese Bitcoin Buyers Are Getting Around Government Ban




Chinese citizens are still investing in Bitcoin and the cryptocurrency market despite the government’s heavy crackdown.

In September 2017, Chinese cryptocurrency exchanges BTCC China, Huobi and OKCoin were ordered by the government to shut down their businesses. At one point, executives of the three cryptocurrency exchanges were prevented from leaving the country, due to a government investigation into local cryptocurrency exchanges.

Three months later, in December of 2017, China’s three largest cryptocurrency exchanges relocated their businesses to Hong Kong. BTCC China, Huobi and OKCoin rebranded to BTCC, Huobi Pro and OKEx, respectively. They intended to address the rapidly growing demand from Hong Kong-based investors.

Shortly after their move, the three trading platforms started to see daily volumes from Chinese investors grow exponentially. Somehow, Chinese investors were managing to circumvent Chinese trading restrictions by using Hong Kong-based exchanges. How is this possible?

In Hong Kong, it is relatively easy for investors to set up businesses. With less than $1,000, businesses can be legally created, which allows the opening of business bank accounts at Hong Kong-based financial institutions. Beginning in December 2017, many Chinese investors moved their funds from their Chinese bank accounts to Hong Kong bank accounts and started to trade cryptocurrencies more actively, effectively bypassing China’s restrictions.

But, unlike China, Hong Kong has a substantially lower supply to meet the growing demand. While China is home to major miners like Bitmain, Hong Kong does not produce much Bitcoin and other cryptocurrencies. As such, premiums in the Hong Kong cryptocurrency market increased, surpassing even that of the South Korean market. On January 18, when the global average price of Bitcoin was around $11,500, Bitcoin was being traded at above $13,000 on Huobi Pro.

Krystal Hu, a Hong Kong-based finance journalist, noted that traders outside of China have also started to take advantage of the arbitrage opportunity presented by the Hong Kong market. For instance, on January 18, the price of Bitcoin on Coinbase was $11,800. Purchasing Bitcoin from Coinbase and selling it on any Hong Kong-based market would have generated $1,200 in profit.


Chinese Government Concerned

Hong Kong’s exchanges have also integrated widely-used fintech applications in China such as Alipay and Tencent’s WeChat Pay. Alipay is a $60 billion fintech app that is used by more than 50 percent of mobile users. WeChat Pay, which was only used by seven percent of mobile users in 2014, is now being used by more than 40 percent of mobile users in China.

The integration of the two fintech payment networks has increased the accessibility of Hong Kong-based cryptocurrency OTC exchanges for Chinese investors, easing the process of investing in the cryptocurrency market.

To prevent Chinese investors from buying digital currencies, the Chinese government and the People’s Bank of China (PBoC), have asked local banks to disclose any suspicious transactions linked to Hong Kong-based markets. However, even this action will not be able to prevent Chinese investors from accessing Hong Kong-based markets, due to apps such as Alipay and WeChat Pay.


Source: https://cointelegraph.com/news/how-chinese-bitcoin-buyers-are-getting-around-government-ban

This is definitely the reason why Bitcoin's growth is unstoppable at the moment. It is because there are no international standards on how to address this global concern. Like what happened here, you can see how China put a stop at Bitcoin by totally banning it in their country but its people can do some workaround because other countries are open to accepting Bitcoin. This problem will not stop unless all governments worldwide will come up with a standard front to regulate the growing number of cryptocurrencies. Until such time comes, I do not think banning Bitcoin will be of sense at all.

[Qartersa]

China has to accept that you simply can't prevent people from investing in Bitcoin. One way or another, there will always be a way for people to trade Bitcoin, even when it's not as convenient as trading on an exchange. I seriously hope that decentralized exchanges will become the norm in the coming years, because people for once need to understand how annoying and unworkable centralized exchanges are getting due to all the regulations. I have taken a look into some of the more popular decentralized exchanges, but it's still more or less a hassle and time consuming practice to settle trades. I hope that atomic swaps will be able to bring the necessary convenience people need in order to take decentralized exchanges more serious.

True. Lest we forget, one of the reasons why people opted to try out cryptocurrencies is because of the heavy papers and fees that governments and banks require of us when we have transactions involving OUR OWN monies. How inconvenient is that! Not only that, they get a huge chunk out of every transaction leaving us with only a fraction of our monies. This has got to be seriously a threat to all investors worldwide. That is why I hope Bitcoin's system will improve for the better because majority of the people here clung to a hope that they would get their monies' worth, unlike what they have experienced with the centralized system. CONVENIENCE AND FLEXIBILITY is key in this day and age, hence there should be no stopping the growth of cryptos.

[alexwolf011]

I am a Chinese. We can buy bitcoin by the OTC way.

You should know there are many miners in China. They need to sell their coins for paying electricity bill.

[yojodojo21]

In a country like China you must play with crypto professionally sometimes I rather prefer some title about this issue that doesn't never end I have entitled it, "Hunting crypto survival hardheaded investors" it's underground battle between stubborn China's government implementation of trying to choke cryptocurrency  with the unstoppable investors fighting for what they want. Money will always be money crypto is money no one can stop to look for money.

[Canis Majoris]

I'm loving the way how these Chinese investors are out playing the ignorant government. You can't simply try to put a hold to something this revolutionary as cryptocurrency. The article only demonstrates that the market will always find it's way to do business regardless of what the Chinese government has to say. You ban crypto? Sure, we cut all ties with the country and move elsewhere and do business over there. It's that simple.

I don't think it is that simple. The Earth is round and if all governments around the globe decided to put a bridle on Bitcoin, there will be no place where it can hide. Other than that, the Chinese government aren't ignorant and still less are they incompetent. The authorities effectively kicked Bitcoin out of China, and they likely had a number of reasons for doing so. Therefore, Bitcoin has to move somewhere taking its possible negative effects on the economy to other countries. It is like some countries exporting their inflation to other countries. Kind of economic war.

[richardsNY]

You should know there are many miners in China. They need to sell their coins for paying electricity bill.

Miners, especially the larger farms, are the best possible OTC sources for very large buyers. It's a beneficial 'service' that works in 2 ways -- one being that the miners don't have to dump the market down in order to liquidate a large number of coins, and secondly, larger players don't have to buy the market up when buying large numbers of coins. In other words, Chinese miners will not struggle to liquidate their coins due the Chinese regulations. There is most likely far more buyers interest for these coins than available supply. The actions of the Chinese government are only working against them, and they seem to slowly understand that.