Bitcoin and cryptos in general are booming in China, with the attempts of their central bank generally failing to keep millennials away from the global digital revolution.
Stats are no longer easily available however about trading volumes and the like in China because crypto there has gone what we’ll call underoverground.
The infrastructure has gone underground through peer to peer trading, but accessing it is a very overground matter and in many ways not too different from the west.
That’s primarily through so called Over the Counter (OTC) markets which are a lot more efficient than something like Localbitcoin because there it’s not a secondary or a third level market, but a primary one.
From circa late 2017 to around 2019-2020, such OTC platforms were provided by what are now in crypto household brands, OKEx and Huobi, until that became so popular it was incorporated in our own news cycle.
Some time after, they were closed, with PBOC presumably a bit offended they appear so powerless in front of the public.
Closed. Well, maybe where those brands are concerned and those specific platforms. As anyone keeping an eye on gaz guzzlers learns, crypto projects keep showing up from China. NFTs there are booming. So much so in fact we declared that PBOC had ‘officially’ lost.
Clearly that doesn’t mean they won’t keep trying, but now they’re in a bit of a pickle because PBOC v Crypto has gone cross jurisdictional.
“The provision of services by overseas virtual currency exchanges to Chinese residents through the Internet is also an illegal financial activity,” PBOC said in a new notice that has been misinterpreted. They add:
“For domestic staff of relevant overseas virtual currency exchanges, as well as legal persons, unincorporated organizations and natural persons who know or should know that they are engaged in virtual currency-related businesses and still provide them with services such as marketing promotion, payment and settlement, technical support, etc., they shall be investigated in accordance with the law.”
For some time now, and more recently than before, we’ve heard of project after project setting up OTC platforms from overseas to serve the Chinese market.
Generally they’re names we’ve never heard of, but on the surface look like pretty capable teams. As far as they’re concerned there’s a lucrative business, and thus there’s a lot of money in setting up such businesses.
PBOC can’t shut down such entities as they’re overseas, but as they say they can of course investigate people in China that may be involved in “business,” not for personal use. However this ‘ban’ is a PBOC diktat. As such, it is not a law, and it is not quite a crime in the usual sense of the word, so it isn’t clear what the punishment would be besides closing their bank account.
As you may have heard some media is misreporting that PBOC is banning all crypto transactions. That’s not what their notice says, but a ‘ban’ of facilitating crypto transactions has been in place since forever. Hence we get news now and then of OTC bank accounts being closed.
Which is why people in China don’t mention bitcoin or crypto in their bank transactions as the bank may close their bank account.
Buying or selling bitcoin is in itself not illegal however. Holding bitcoin is not illegal either. For that a law in the People’s Assembly would be necessary as PBOC has no other power where cryptos are concerned but to close bank accounts.
Xi Jinping and the Chinese Communist Party (CCP) may take the next step of criminalizing crypto, but that would come with considerable costs because there are probably millions of crypto holders in China, including financial houses in Shanghai.
Taking such step would also potentially risk unrest because one can imagine the anger of a family and their friends after seeing their very smart son or daughter, who may well be a role model, get sent of to prison because he needed some eth to learn Solidity. Not least because from a little rupture there have been many avalanches.
As such you’d think this PBOC bank blockade is as far as they’ll go, but who knows. It is probable however that even outright criminalization wouldn’t quite change anything, except maybe temporarily, as enforcement would be risky. Hence they’d be limited to making an example of someone now and then with no one else really caring because hiding bitcoin possession is just too easy.
But they could extend action against central entities. China doesn’t have free speech, so they could try and close some crypto media there. A futile exercise because there’s social media and of course any crypto media can go overseas.
Their aim is presumably to step by step limit mainstream access, but China’s mainstream is used to all this. This isn’t the first time and won’t be the last that CCP disagrees with the public. A public that isn’t quite as obedient as in the west where laws are generally by consent. And a public that most likely has the enforces themselves, or their family, into crypto.
So the most they can do is bark, and for years they have been barking, while the bitcoin caravan moves on. And thankfully, after five years, we can finally establish that the caravan is moving on with the Chinese people too.
That’s because it appears there’s nothing CCP can do, and with every such announcement or a repetition of previous announcements, that becomes even more clear.
There’s one last step they can take, which they haven’t taken and might never take, but either way it appears it won’t change nothing as the PBOC v Crypto war seems to be practically over, and crypto won.
Because it is peer to peer, making it extremely resilient, especially due to its code based nature which has allowed such coders in and outside China to be probably ten steps ahead of PBOC. A PBOC that is now reduced to effectively saying nothing where the new Overseas OTC platforms are concerned because what can they say.
They have no power over them, and they even have no power over bitcoin. They only have power to print baby print in ‘legally’ counterfeiting their own currency at the expense of all people and businesses in China, unless they escape to crypto, or to close some bank account that can be opened again elsewhere.