Over-the-counter (OTC) crypto desks in China have been making headlines as they continue to attract significant investments despite the nation’s strict crackdown on the digital assets industry. According to data from crypto analytics firm Chainalysis, these OTC brokers in China have managed to lure in an impressive $75 billion in funds over the past nine months.
The Chinese government imposed a ban on both crypto mining and trading in 2021, forcing crypto traders in the country to seek alternative methods such as OTC or peer-to-peer (P2P) trading to circumvent detection. The latest study reveals that around 55% of OTC crypto transactions in China involve amounts exceeding $1 million, although it remains unclear whether these trades are conducted by individuals or businesses.
Eric Jardine, the cybercrimes research lead at Chainalysis, highlighted the regulatory challenges faced by these OTC services in China, stating that they operate in a gray zone of the economy. He suggested that unless there is a more favorable regulatory environment for crypto in China, these services are likely to continue growing.
Reports also suggest that some of these OTC payments are being used for cross-border transactions with Russia. Angela Ang, a senior policy adviser at blockchain intelligence firm TRM Labs, pointed out the difficulties Chinese regulators face in policing international payments due to the borderless nature of the crypto industry.
Despite efforts to crack down on crypto-enabled crime and tighten anti-money laundering laws, enforcing bans in the crypto space remains challenging. The evolving landscape of digital assets and the decentralized nature of the industry present ongoing challenges for regulators worldwide.
In conclusion, the growth of OTC crypto trading in China amidst regulatory restrictions underscores the resilience and adaptability of the crypto market. As the industry continues to evolve, it will be crucial for regulators to strike a balance between fostering innovation and ensuring consumer protection in the digital asset space. Subscribe to stay updated on the latest developments in the world of cryptocurrency.