As Beijing seeks to regulate and suppress the crypto boom, traders are avoiding regulatory oversight by using OTC or OTC trading schemes.
According to a report by Bloomberg on May 31, there has been a significant increase in the use of the OTC platform since China announced the latter earlier this month, with China tightening restrictions preventing financial institutions and payment companies from offering cryptocurrency-related services. . …
Although accurate volume data is difficult to find, since Chinese OTC transactions are peer-to-peer and use third-party payment platforms, the exchange rate between the Chinese yuan and the popular Tether (USDT is seen as a major measure of domestic cryptocurrency transactions.) . Market sentiment – with increased demand for USDT during periods of market downturn.
The USDT / CNY currency pair fell 4.4% after the Communist Party collapsed earlier this month, but has since recovered more than half of the losses, according to Bloomberg. The rally suggests that oversold conditions may have passed when the markets started to consolidate.
One cause for concern in the Chinese cryptocurrency campaign is the capital flight, which is seen as encouraging by their recent move into the industry. Bloomberg noted that OTC trading may not pose the same capital flight risks as regular exchanges, suggesting that regulators may not be ruthless in their approach to the sector.
The report stated, “Since some (over-the-counter) yuan-denominated transactions are carried out exclusively in China’s domestic financial system, there is little risk of significant capital outflows.
China’s transition to OTC markets reflects the situation at the end of 2017, when the country first imposed a ban on currency exchange. Despite the economic downturn, today Chinese traders are still believed to account for a large share of global crypto trading, with analysts estimating that China held 7% of the world’s bitcoin and accounted for nearly 80% of trade prior to its adoption in 2017.
The recent wave of government restrictions has also led to targeted cryptocurrency transactions as China seeks to revise carbon neutrality targets. Several companies, including Huobi and OKEx, have closed their local mining companies to Chinese customers.
As a result, the difficulty of mining bitcoin fell by 16% on Sunday to $21 trillion, the biggest drop this year. The complexity of mining allows us to estimate the computational power required to produce new bitcoins.
The network automatically adjusts the difficulty level every two weeks, depending on the competition between the two miners. The lower the price, the less competition – which means that many have already closed their platforms.