China’s currency has been considerably falling in value over much of this month against the dollar, down some 4% in the past few weeks, with 6.40 Yuan worth one dollar at the beginning of the month, but now has fallen to as low as nearly 6.70.
The fall appears to be due to China’s economy suffering a set-back after being downgraded by the global rating agency S&P over concerns regarding unsustainable and growing debt levels. While there are suggestions the Communist Party may once more be engaging in intentional devaluation.
The fall in value coincides with China’s draconian intervention in this space, shutting down crypto exchanges and banning executives from leaving the country.
But that does not appear to have deterred Chinese bitcoin traders who continue to buy and sell the currency despite the still unofficial intervention by China’s Communist Party.
“I can do over-the-counter trades or I’ll go offshore… My wallet is my wallet,” says a Chinese bitcoiner who would rather not be named due to the sensitivity of the situation, before adding:
“They can’t set rules to stop me from investing in what I want to invest in. They say you are protecting me, but as long as I think this is good, they have no way to intervene.”
Digital currencies are pseudo-anonymous. With a bit of effort parties can transact in a fairly anonymous peer-to-peer manner, making enforcement of any crackdown very difficult, if possible at all.
That’s especially in light of a considerable price premium between bitcoin’s price in the west and in China where it trades at a discount of some $600, making it in effect free money if you can arbitrage by selling it in the west after buying it in China.
All of which has led to a considerable increase in Chinese trading volumes for Localbitcoins, nearly tripling in two weeks. Even ICOs, which are outright banned in the country making it a criminal offence for Chinese citizens to trade them, are actually still being traded in China, with reuters reporting some foreign ICOs were still being marketed in the country.
Moreover, China based bitcoiners have moved off WeChat to encrypted messaging platforms, such as Telegram, making detection more difficult while increasing any enforcement costs.
The bitcoin scene therefore seemingly still continues in the country. With the fall of Yuan, its popularity might even increase further despite the best efforts of the authoritarian Chinese government.