Over-the-counter (OTC) crypto desks in China are reportedly attracting tens of billions of dollars from investors, despite the country’s crackdown on the digital asset industry.
Citing data from crypto analytics firm Chainalysis, Bloomberg reports that China’s OTC brokers have raised $75 billion in funds in the past nine months.
In 2021, the Chinese government banned both crypto mining and trading. According to Bloomberg, Chinese crypto traders have turned to OTC or peer-to-peer (P2P) trading methods to avoid detection.
The research shows that about 55% of OTC crypto transactions in China exceeded $1 million, although it is unclear whether the transactions were made by individuals or companies.
As Eric Jardine, cybercrime research leader at Chainalysis, says:
“Given the regulatory context in China, including the ban on cryptocurrency trading and mining, these services invariably fall into a gray zone of the economy…
Unless the regulatory environment in China becomes more favorable towards crypto, I would expect these types of services to continue to grow over time.”
Anonymous people familiar with the matter told Bloomberg that such payments were also used to settle cross-border payments with Russia.
However, Angela Ang, senior policy advisor at blockchain intelligence firm TRM Labs, says Chinese regulators may struggle to oversee international payments.
“We have seen Chinese authorities take steps to crack down on cryptocurrency-enabled crime and tighten anti-money laundering laws, but the reality is that these bans are difficult to enforce given the borderless nature of the industry.”
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