China’s underground crypto market booms

A record-breaking $75.4 billion inflows despite ban

Author

Daniel Akpobare
September 26, 2024

In partnership with

GM Explorer,

China's crypto ban hasn't stopped underground trading; instead, it has raked in a staggering $75 billion in inflows over nine months.

Here’s what we got for you today:

  • 🤑 China’s underground crypto market booms!

  • 🗣️ Kamala Harris breaks her silence on crypto!

  • 🧱 Around The Block: PayPal expands crypto offerings for U.S. businesses.

🤑 China’s Underground Crypto Market Booms!

China’s underground cryptocurrency market is thriving despite the country’s official ban on digital asset trading.

A recent study reveals that over-the-counter (OTC) crypto brokers in China saw record-breaking $75.4 billion inflows over a nine-month period ending June 2024.

Not just that, inflows surpassed $20 billion in each of the three quarters leading up to June, setting a new record since data collection began in 2021.

How did this happen?

Poor performance in China’s traditional equity and property markets has driven investors to explore alternative investment options, such as OTC services.

These OTC services allow Chinese investors to discreetly exchange yuan for digital tokens without relying on public cryptocurrency exchanges.

And the size of individual transactions is quite remarkable.

About 55% of the total value received by China’s OTC traders comes from transfers worth more than $1 million.

However, it is unclear whether these large transfers originate from wealthy individuals or businesses acting on behalf of smaller clients.

What is crystal clear, though, is that these OTC services operate in a legal gray area.

China imposed a ban on cryptocurrency trading and mining in 2021, but its underground market has continued to grow, suggesting that enforcement of the ban may be less strict than we thought.

In fact, Eric Jardine, the cybercrimes research lead at Chainalysis, believes that the lax enforcement of the crypto ban could be fueling the growth of these services.

Meanwhile, Hong Kong takes a different approach!

In late 2022, the city shifted toward establishing itself as a crypto hub, permitting digital asset trading within its jurisdiction.

This contrast shows the complex relationship between China’s strict regulations and Hong Kong’s more open approach toward the crypto industry.

However, as economic pressures rise, Jardine predicts China's underground crypto activity will only keep growing unless the regulatory situation becomes more favorable to crypto.

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🗣️ Kamala Harris Breaks Her Silence On Crypto!

You know how quiet Vice President Kamala Harris has been on crypto matters? Well, she finally broke her silence!

And let me tell you, her words were music to the crypto industry’s ears!

During her recent speech at The Economic Club of Pittsburgh, she talked about reclaiming the U.S.'s global leadership in cutting-edge technologies like artificial intelligence, quantum computing, and—wait for it—blockchain!

Yes, you heard that right—she actually mentioned "blockchain"!

This is a huge deal guys, especially since Donald Trump has been the loudest voice in the crypto arena.

In-fact, he’s been making the rounds at crypto conferences and even visited a Bitcoin-themed bar in New York City! Talk about dedication.

So, what prompted this sudden change of heart from Harris?

Well, the competition, for one, is bloody fierce, and she knows it! but then maybe it’s just us having wild thoughts.

For Harris, it's all about the importance of these sectors and their potential to shape the next century, making it essential for the U.S. to maintain its competitive edge in these evolving landscapes.

And guess what? She shared her game plan for achieving these goals!

She made it clear that her administration would not only embrace innovative technologies like AI and digital assets, which she termed as “opportunity economy”, but will also create a safe business environment for consumers and investors.

Most importantly, she vowed to establish consistent and transparent rules to guide these industries.

Sounds like sweet music, right? Well, it's exactly what the crypto industry has been hoping for! But are they buying it? 🤔

Analysts at VanEck have mixed feelings about the implications of the upcoming November election for the crypto market.

They pointed out that while both Harris and Trump seem bullish on Bitcoin, their policies could have different impacts on the broader digital asset landscape.

Interestingly, they suggest that a Harris presidency could particularly accelerate the structural changes needed to drive Bitcoin adoption.

The stakes are higher than ever, and the future of crypto and other emerging technologies is hanging in the balance.

Plus, Harris’s newfound stance has definitely added an exciting twist to the election dynamics.

So, who else is eagerly anticipating the upcoming election? Well, here’s where you can find all the details!

🧱 Around The Block

That's all we've got for you today.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions.

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