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Chinese traders go to OTC desks because of crypto crackdown

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Vandana Mrigwani Follow

INDIA

Jun, 01 2021

Jun, 01 2021

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China’s central government seems to fear that it has done little to conquer local demand for crypto assets. As Beijing attempts to regulate and overpower the cryptocurrency boom, traders have been avoiding regulatory oversight by using OTC trading desks.

 

In the report that was published on May 31 by Bloomberg, there has been an important uptick in the OTC platform. China declared its latest crackdown before this month, with China construction restrictions on the financial institutions. And the payment companies from providing services associated with cryptocurrencies.

 

Concerns and volumes to handle-

 

While countable volume data is hard to determine as Chinese OTC transactions are peer-to-peer and use third-party payment platforms. The exchange rate between China’s yuan and prevalent stablecoin Tether also with demand for USDT is growing during market downturns.

 

Referring to Bloomberg, USDT/CNY fell by as much as 4.4% after the Communist Party crackdown. The recovery proposes that peak selling may have been approved as the markets initiate to consolidate.

 

One of the concerns motivating China’s crypto crackdown is wealth outflows, which have been seen to spur their latest moves to overpower the industry. Bloomberg speculated that OTC trading may not do the same capital flight risks related to typical exchanges. These suggested regulators may not be so heavy-handed in trading with the sector.

 

Current status -

 

The newest wave of government-imposed limitations has also seen crypto mining operations directed as China attempts to align its carbon impartiality goals. Numerous companies including Huobi and OKEx have stopped their local mining operations and mining facilities for Chinese customers.

 

As an outcome, Bitcoin's mining struggle fell by 16% on Sunday to 21 trillion. This is the sharpest drop this year. Mining struggle provides an estimate for the calculating power necessary to produce a new BTC.

 


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Vandana Mrigwani

CBW - External Analyst

INDIA

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