Chinese official media reveals secrets"! Domestic retail investors "secretly" speculate in currencie

Recently, Bitcoin trading has continued to heat up. On March 14, Bitcoin hit a maximum of $73,777, about 530,000 yuan per coin, setting another record high. With four records broken in a week, Bitcoin has become the eighth-largest asset in the world by market capitalization. With this wave of gains, Bitcoin is becoming more and more popular.

During this round of gains, Asian investors have been extremely active. According to data from The Block, investors in Asian countries such as South Korea account for about 70% of Bitcoin trading volume, which is similar to the situation in 2021. Data shows that of the cumulative US$1.17 trillion in Bitcoin transactions in February 2024, Asian investors contributed US$791 billion, while North American investors accounted for only US$113 billion.

Recent developments have sparked discussion about whether China may reconsider its stance on cryptocurrency trading. Despite an explicit ban on cryptocurrency trading that has been in place since September 2021, there has been a noticeable increase in interest in cryptocurrencies within China. This is clearly proven by the growing trend of searching for Bitcoin on platforms such as Weibo and WeChat.

The continuously soaring prices have tempted many investors to start making moves again. To pinpoint the lifeblood of those who want to get rich overnight, a group of bloggers who "teach you how to speculate in coins" have once again appeared on major social platforms recently.

Chinese official media pointed out that the "currency circle" is so popular that it has also attracted the envy of many domestic investors. The reporter noticed that many investors on domestic social platforms shared strategies for purchasing Bitcoin through overseas exchanges. Among them, Eureka Exchange, Huobi Exchange, and Binance Exchange have become the main purchasing channels.

At present, most of the above-mentioned exchanges are "C2C" models, that is, the counterparties of individual buyers are actually individuals, conducting point-to-point transactions, and the platform does not have a capital pool. A senior person in the currency circle explained that the underlying logic of this trading model is very similar to that of "Xianyu". Once both parties agree on the price, the transaction can be completed, and the platform plays a monitoring role.

"Under this model, domestic players generally trade with domestic players. Trading cryptocurrencies with overseas players is risky, and is subject to the supervision of domestic supervision. Accounts are prone to problems such as difficulty in withdrawing money or frozen cards." The above-mentioned currency circle person explained, Except for the purpose of illegal money laundering, most people will choose "easy mode" domestic transactions.

Chinese official media reporters also discovered during the actual test (without purchase) that some overseas exchanges can still register, log in and trade with mainland identities, and there is no need to modify their positioning or purchase overseas IDs. In addition, there is a type of "order teacher" active in multiple communities. They claim to be able to guide the Bitcoin trading process step by step and provide investment guidance. They usually need to operate at designated exchanges.

In the official operating community group of an exchange that the reporter joined, the number of new mainland users exceeded 100 in one hour. "For retail investors, the way to make money from currency speculation is very simple, off-chain transactions and on-chain transactions." A popular science blogger in the currency circle said on a social platform. Off-chain trading is mainly conducted on exchanges. You first pay to buy USDT, and then place buy and sell orders directly on the platform. “You can trade cryptocurrencies just like trading stocks.”

USDT is a virtual currency that pegs cryptocurrency to the U.S. dollar, with 1 USDT equal to 1 U.S. dollar. The blogger explained to reporters that the currency circle uses USDT for transactions by default because price fluctuations are small.

The Chinese official media finally emphasized that trading virtual currencies through the above channels has always been strictly prohibited in the country, and the above channels are all "back channels" that violate regulations. In 2017, relevant departments required all domestic Bitcoin trading platforms to shut down and withdraw from the market. In 2021, the People's Bank of China issued a notice stating that virtual currency does not have the same legal status as legal currency and that virtual currency-related business activities are illegal financial activities.

However, despite the outright ban, China’s cryptocurrency market has shown remarkable resilience, and the level of activity in the underground market is undeniable. Techniques ranging from using gray market traders to taking advantage of Hong Kong’s relatively lax regulatory framework for digital asset trading have demonstrated investors’ ingenuity in responding to the ban.

Additionally, financial institutions with stagnant domestic markets are increasingly looking to digital assets as an avenue for growth. Hong Kong-based subsidiaries of major Chinese financial institutions are delving deeper into the cryptocurrency space, a move that highlights a broader interest not just limited to individual investors but also at the institutional level.

Summarize

In the carnival of the currency circle, we see all kinds of beings, some are chasing highs, some are short-sighted, between desire and risk, some are happy, and some have broken dreams. The encryption supervision in mainland China has gradually become complicated. On the one hand, the Chinese government’s firm warnings and legal restrictions reflect a cautious attitude toward digital currencies. On the other hand, economic pressure and the lure of high cryptocurrency returns push individuals and institutions to creatively work around these restrictions.

A strong underground cryptocurrency market, coupled with the government’s hardline stance, has raised questions about the direction of China’s future cryptocurrency regulatory framework. While the official stance remains unchanged, developments in Hong Kong may pave the way for a more nuanced approach.

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