Despite Beijing’s increasing crackdown on crypto industry, there are still signs of life in People’s Republic about the Bitcoin network.
China increased its crackdown on crypto last week to try to stop any activity that may be related to digital assets. Although the regime targeted crypto transactions specifically, Cointelegraph found that there have been at least 19 similar crackdowns in the past decade.
According to Bitrawr data, 135 Bitcoin nodes are still in operation in China despite the recent move. Bitrawr measures nodes by geographic location. This is only 1.21% of 11,262 Bitcoin nodes across the globe. They may have more if they operate behind virtual private networks (VPNs), or use onion routing with Tor, which hides their locations.
Bitcoin nodes are software running the protocol. They contain the entire ledger, or a portion of it that contains a history of transactions. Decentralized and distributed systems are designed to be difficult to shut down, so it is possible that the regime will struggle to extinguish those remaining or those using Tor.
It’s hard to quantify the volume because it is opaque, but OTC trading appears to be gaining traction in China according various reports. This is also true for the local currency pair.
Wu Blockchain, a local media outlet, reported that the RMB/USDT pairing, which is still offered on major exchanges like OKEx and Huobi has been trading at an elevated rate. He said panic selling has subsided since last week.
OKEx currently offers 6.35 yuan per 1 USDT, while the actual exchange rate is 6.47 for a greenback according to XE.com.
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OTC trades can be done peer-to-peer, which avoids the need for a bank or spot market on centralized exchanges. However, many exchanges have OTC desks. Coindance reports that volumes in China are relatively stable from early 2020. Around 7 million Yuan (around US1 million) is traded per week via the P2P platform Localbitcoins.
Localbitcoins volume CNY – coin.dance
Bobby Lee, the former CEO of China’s first crypto-exchange BTCC, believes that Beijing will target OTC desks during its next crackdown. He stated earlier this week that OTC platforms operated by large exchanges would be shut down or excluded from Chinese users. Lee said the following to Bloomberg on September 29:
“They don’t want any loopholes that allow people to use digital currencies as a way to move assets overseas.
He then followed up by predicting that the BTC markets would be experiencing another FOMO rally, which could see prices rise to $200,000.