In a daring move against China’s crypto ban, traders within the country have devised ingenious alternatives to participate in the cryptocurrency market. This defiance highlights the challenges faced by jurisdictions adopting stricter regulatory stances.
Bypassing China’s Crypto Ban
Chinese traders are utilizing unconventional methods to continue their involvement in crypto trading despite the country’s stringent regulations. Social media platforms such as WeChat and Telegram serve as conduits for connecting with potential trading partners, facilitating peer-to-peer transactions outside traditional crypto exchanges.
Public venues like cafes and laundromats have become meeting spots for traders, where they exchange wallet addresses and share drives containing cryptocurrencies. Payment methods have diversified, including cash or bank transfers for cryptocurrencies. Cities like Chengdu and Yunnan have gained popularity due to their lower monitoring and enforcement by the central government.
Coin Center’s Neeraj Agrawal notes, “China seems to have been unsuccessful in its efforts to ban crypto trading, possibly putting their strict capital controls at risk.”
Innovative Approaches to Bypassing Restrictions
Traders have turned to virtual private networks (VPNs) to access foreign crypto exchanges, despite attempts by exchanges to close accounts belonging to Chinese residents. Some traders resort to opening crypto accounts with forged documents, providing false residence and bank details to circumvent Know Your Customer (KYC) protocols.
Last year, CNBC reported that even Binance community managers were allegedly telling Chinese customers how to bypass the restrictions. According to them, China clients had to use a VPN to switch their IP address to Taiwan, and use an overseas email such as Outlook, Gmail or ProtonMail to register their account. Users were further advised to avoid using IPs in United States, Singapore, or Hong Kong, as Binance also restricts traders from these regions.
Being able to pass KYC restrictions and country bans on larger exchanges such as Binance or Bybit is a relief to traders in China. These larger exchanges are typically far more serious about letting customers bypass these restrictions and accessing them from restricted regions. Many smaller exchanges without mandatory KYC are even easier for Chinese customers to use, as they do not require foreign IDs or proofs of residency.
Furthermore, as advised by Binance community volunteers in support channels, participating in Binance Launchpad is also possible by registering an overseas company, or with a foreign KYC. Getting a foreign KYC is also easily possible through Palau ID.
Using these unconventional approaches contrasts sharply with China’s stringent regulatory environment, which banned crypto trading and mining. It only shows that trading crypto in China is still possible despite government bans.
Forex Purchase Quotas in Hong Kong
Following Hong Kong’s recent embrace of digital assets, Chinese citizens are now utilizing their $50,000 annual forex purchase quotas to transfer funds into cryptocurrency accounts within the territory. However, according to Chinese regulations, these funds are restricted for purposes such as overseas travel or education.
These forex purchase quotas are frequently used for off-shore crypto buying in China. Many exchanges continue to provide trading services to Chinese investors, facilitating their access to fintech platforms like Ant Group’s Alipay and Tencent’s WeChat Pay. These platforms enable users to convert yuan into stablecoins through dealers, allowing for seamless cryptocurrency trading.
Amid China’s cryptocurrency ban, investors are adopting other inventive methods to handle their funds. For example, investors have been known to utilize bank cards from small rural banks to procure cryptocurrencies via unofficial channels. To evade scrutiny from authorities, the transactions are kept below 50,000 yuan (approximately $7,000).
Flourishing Crypto Activities
Despite regulatory measures, cryptocurrency trading in China persists. According to a Chainalysis report, China ranks as the third Asian country with the highest crypto activities. Between 2022 and 2023, the country saw a significant $86.4 billion in crypto transactions, underscoring the challenges faced by authorities in effectively policing the sector against determined traders.
Read our Trading with VPNs guide for an in-depth look into using no-kyc exchanges.
Chinese traders showcase resilience and innovation in their pursuit of crypto trading, challenging the effectiveness of regulatory restrictions within the country.
