The Chinese government is well known for its bipolar approach towards blockchain technology. In one hand, the government urges more investors to use the distributed ledger technology in research and development. On the other hand, the government banned ICOs and cryptocurrency related transactions and even blocked more than 120 cryptocurrency trading platforms.
However, the Savvy Chinese investors will always find other trading ways despite the ban. As reported by a media outlet South China Morning Post (SCMP), the crypto traders are now using Virtual Private Networks (VPNs) to bypass the ban. It has also been reported by Shanghai Securities Times that some traders are using Tethers (USDT) to get into the cryptocurrency. markets.
Traders Still Investing In Bitcoin (BTC)
Earlier this year, the Central Bank of China published a report indicating that the ban was successful. China authorities then continued to close down as many cryptocurrency exchange platforms, crypto related entities and ICO projects as they could. Most of the blocked platforms were those whose pages were written in Chinese. This ban affected the top exchange platforms, with some incurring a massive loss of up to 33% within one month.
However, the witty traders seem to have found a way out. According to the Chinese newspaper, traders now use Tether and VPNs as an intermediary and carry out their business transactions as usual. The cryptocurrency exchange platforms switch their domain locations and names to avoid detection. The users then confirm to know each other through the “Know Your Customer (KYC)” procedure, then exchange non-fiat currency for tether. Since tether is less volatile as compared to Bitcoin, the crypto transactions react only when an error occurs.
According to the newspaper, the parties transfer the money through their bank accounts, then use VPN to carry out virtual exchanges when the funds (tether) is received.
Also, some exchange platforms which were banned in the country transferred their servers to other nations, thus making it virtually impossible to be detected. Currently, there are no VPN restrictions in the country thus making it easy for the traders to interact with others in the cryptocurrency world. As indicated by the Shanghai Securities Times, the regulators work closely with third-party financial companies to stop all virtual currency transactions.
While speaking to SCMP regarding the ban, Terence Tsang, the CEO of Taiwan and Hongkong’s TideBit centralized cryptocurrency exchange, said that:
the increased monitoring on cryptocurrency platforms is primarily targeted to the small exchanges that claim to be operating outside the country but they are operating from within.”
So far, the Chinese authorities have not yet taken actions against the VPNs. Probably, if they do, the ban against digital assets will be more successful. However, some experts argue that it might take a long time to completely ban VPN since the process requires numerous negotiations between stakeholders who must reach the consensus of installing the “Great Chinese Firewall.”
SCMP news also hints that it might be hard to block the VPNs at this time. Nevertheless, Tencent among other companies has confirmed that they will ban the accounts, or block the transactions. How such accounts and transactions will be identified, though, has not yet been revealed.
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