Record $75B Flows into China’s OTC Crypto Market as Stocks and Property Decline: Bloomberg

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As a seasoned crypto investor with over two decades of market experience under my belt, I find myself increasingly intrigued by the resilience and adaptability of China’s cryptocurrency market. Despite Beijing’s three-year ban on digital asset trading, it seems that the Chinese dragon has found a way to breathe fire in the crypto realm – through over-the-counter (OTC) brokers and peer-to-peer (P2P) trading platforms.

Investors in China are experiencing surging interest in over-the-counter (OTC) cryptocurrency platforms, as they seek out new investment opportunities amidst sluggish stock and real estate markets within a decelerating economy.

Based on a report by Suvashree Ghosh for Bloomberg, which refers to a study by Chainalysis Inc., OTC brokers received approximately $20 billion during each of the first three quarters of 2024, adding up to a staggering $75.4 billion over the nine-month period – a record high since data collection began in 2021.

In contrast to the three-year-old prohibition on digital asset trading by Beijing, Chainalysis indicates that Chinese interest in cryptocurrency remains strong. Over-the-counter (OTC) services are favored due to their ability to let investors secretly swap yuan for crypto without needing exchanges with public transaction logs. Additionally, peer-to-peer (P2P) trading serves as a private method for conducting crypto transactions within China.

Eric Jardine, the head of cybercrime research at Chainalysis, stated that these Over-The-Counter (OTC) services exist in a region somewhat undefined by law. He pointed out that despite Chinese officials maintaining a stance against cryptocurrencies, the enforcement has been rather lenient, which has contributed to the growth of these services.

According to Chainalysis data, approximately 55% of the overall value processed by over-the-counter (OTC) brokers was derived from transactions exceeding $1 million. However, it’s uncertain if these large transfers were made by wealthy individuals or businesses serving smaller clients. Jardine anticipates that OTC services will continue to expand as long as China doesn’t significantly alter its cryptocurrency regulatory policy.

As a crypto investor, I’ve noticed that China’s influence in the crypto world continues to unfold, particularly in cross-border transactions. It seems that Russian commodities companies are leveraging digital assets for trading settlements with their Chinese counterparts, according to reliable sources.

Although China has been strict about crypto-related illegal activities and strengthened its anti-money laundering rules, Angela Ang from TRM Labs pointed out that enforcing these regulations can be difficult because cryptocurrencies operate without geographical boundaries.

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2024-09-30 18:05