Illegal Chinese crypto trade keeps growing, will the government intervene?

We already talked about it last week, but in the meantime the illegal Chinese trade in crypto has become so large that the world press has now also discovered the phenomenon. Will the government in Beijing intervene and should we fear a new Bitcoin crash if that happens?

Illegal

On January 19, we told you that Chinese investors were traveling to Hong Kong in ever larger numbers to invest in crypto. They did so in order to secure the value of their Yuan. China is experiencing slower than usual economic growth, their stock markets keep falling just as their house prices. The economic bottom does not seem to be in sight yet.

As a Chinese investor, you naturally look for a solution for your money. Many seem to have found this in Bitcoin and other crypto coins.

🇨🇳 Chinese Turn to Bitcoin Amid Market Crisis, Defying Ban.

Despite an official ban, China ranked 13th globally in 2023 for crypto trade volume, experiencing $86.4 billion in transactions from July 2022 to June 2023. pic.twitter.com/k5ibBEZUox

— Kashif Raza (@simplykashif) January 26, 2024

The problem is that this trade is actually still illegal in the country and is only allowed in Hong Kong for a small amount of money.

Reuters spoke recently with Dylan Run, a financial sector manager in Shanghai who admitted that he had by now converted about 40% of all his assets into crypto, even though trading in Bitcoin is officially banned.

“Bitcoin is a safe haven, like gold,” he said.

Tether is also popular

Other crypto investments are also gaining popularity. Bloomberg reported on the growing trend of converting the Chinese Yuan into Tether in Hong Kong. The largest stablecoin is pegged to the value of the US dollar.

NEW: Reuters covers the rise of “banned” #Bitcoin in 🇨🇳 China

• China’s property and stock woes have driven interest in Bitcoin’s 50% surge since mid-October.

• Despite the crypto ban, China saw $86.4B in transactions from July ‘22 to June ‘23, surpassing Hong Kong’s $64B.

-… pic.twitter.com/711DyhwY6i

— Bitcoin News (@BitcoinNewsCom) January 25, 2024

Of course, this growing press attention for the phenomenon will also arouse the interest of the government in Beijing. The latter decided in 2021 to declare Bitcoin mining illegal on its territory, which caused a seismic shift in the industry. Most Chinese Bitcoin miners moved to the United States.

If China makes a statement about Bitcoin in the coming weeks (Chinese New Year is coming), it could certainly affect the price. Back in 2021 we saw a 10% drop in a single day.