China's ongoing crackdown on underground gangs using cryptocurrency for illegal foreign exchange transactions highlights the ineffectiveness of the country's ban on crypto trading, according to Chengyi Ong, head of policy for the Asia-Pacific region at Chainalysis Inc. A recent Bloomberg report suggests that the raids on these gangs, which have moved over $140 million, indicate that China remains a significant player in the crypto market, despite the ban imposed in 2021.
As previously reported, China has not only restricted the use of cryptocurrency but has also cracked down on cryptocurrency mining. This crackdown has led many miners to relocate to more crypto-friendly countries, causing China to lose its position as the world's top Bitcoin miner. However, the country's efforts to block or control crypto trading have not been successful.
The Bloomberg report explains that the persistent demand for crypto in China is driven by the desire for alternative investments and a way to bypass the country's strict capital transfer rules. Additionally, Chinese residents' understanding of the decentralized nature of crypto assets, such as bitcoin (BTC), also contributes to their interest in crypto.
Chengyi Ong suggests that authorities are struggling to completely eliminate crypto trading. She explains that a significant amount of crypto activity still takes place in China, partially due to the ban's loose enforcement, but also because of the decentralized and peer-to-peer nature of crypto transactions.
To support this claim, Ong's firm estimates that despite the ban, up to $86 billion has flowed into China. While these volumes are lower than before the ban, they still surpass the levels seen in Taiwan and Hong Kong. Ong argues that bans are ineffective in eradicating cryptocurrency activity and instead create informal grey markets that are harder to monitor and regulate.
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