- Cryptocurrencies are currently trading at a discount of 2% to 3% in China.
- Bitcoin miners and traders are hesitant to use OTC platforms because they fear getting their accounts frozen by the government.
- Nevertheless, sources have confirmed that the crackdown is not crypto-related and hasn’t affected business in China.
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This year, several Chinese OTC desks, miners, and traders have been caught up in a large-scale government crackdown, raising fear, uncertainty, and doubt that it is the leading cause of Bitcoin’s price surge.
The Chinese Bitcoin FUD
Thomas Heller, a Bitcoin mining expert from HASHR8, told Crypto Briefing:
“There have always been times where due to anti-money laundering reasons, the banks would have an eye out for these kinds of BTC transfers. But, particularly in the last four to six months, it has been a lot more frequent.”
A survey report by a Chinese media source, Wu Colin, grabbed headlines, pointing out that 74% of miners are complaining that “payment of electricity bills has been greatly affected.”
After the Chinese government banned crypto exchanges in 2017, miners and traders relied on OTC desks or peer-to-peer platforms to exchange crypto and fiat. A crackdown of the desks would thus paralyze the crypto industry in the country.
With miners unable to sell Bitcoin and pay their utilities, commentators have indicated that BTC’s rise has been artificial. As soon as regulators reopen, the price will inevitably crash.
At least, this has been the accepted thesis.
Indeed, the crypto industry in China is facing some unfortunate regulatory blowback. For instance, one USD is trading at 6.60 CNY, but the highest buyer on OKEx’s P2P platform is for 6.41 CNY. Heller confirmed that the USDT/RMB conversions are occurring at a 1% to3% discount. He added:
“People are hesitant to use OTC platforms in China. They don’t want to risk getting their account frozen. And there are several…