To Satisfy Soaring Bitcoin Demand, China's Exchanges Find A Loophole

It’s been nearly two months since Chinese cryptocurrency exchanges were abruptly shuttered by local regulators, part of President Xi Jinping’s ongoing crackdown on capital outflows and potentially embarrassing or destabilizing market forces in the weeks ahead of last month’s National Party Congress. But now that China's new president emperor has cemented his grip on power by installing political allies on the Politburo and successfully lobbying to have his name enshrined in China’s Constitution, the exchanges are taking tenative steps to figure out if it’s safe to do business in China again, and what constraints would apply to their operations going forward.

And while providing an online exchange for fiat-to-digital currency transactions is still expressly prohibited, a couple of the country’s biggest exchanges are rolling out an OTC model that resembles the popular peer-to-peer bitcoin trading website Local Bitcoins, and which will "also support fiat currency transactions."

Here’s CoinDesk:

Some of China's top bitcoin exchanges are now shifting to the over-the-counter (OTC) market in the wake of a crackdown by regulators in the country. In announcements made on Oct. 31, both OKEx and Huobi Pro said they will introduce peer-to-peer trading platforms that support fiat currency transactions, including the Chinese yuan, as an alternative for the country's domestic cryptocurrency investors.


Based in Hong Kong, the two exchanges had previously provided solely crypto-to-crypto trading since being founded by their respective parent exchanges, Beijing-headquartered OKCoin and Huobi. They will now pivot toward a combination of the existing structure and the direct, peer-to-peer model.

The news confirms what most have already known: that Chinese demand to trade, or rather buy, cryptocurrencies is still as strong as ever, if not more. According to OKEx, the yuan is currently the only fiat currency that is available on its P2P platform; it also adds that it has seen increasing demand from Chinese crypto investors since the exchange crackdown.

Lennix Lai, financial market director at OKEx, said the platform has received around 8,000 user applications for account registration since the new service's launch on Nov. 1.

Lin Li, CEO of Huobi, said in his latest announcement that, besides the P2P platform on Huobi Pro, the company is also eyeing an expansion to overseas markets. The firm is currently in the process of setting up an exchange platform in South Korea to compete with local marketplaces like Bithumb.

The news that China may be returning to crypto trading comes as bitcoin rallied to $7,500 last week , news record highs in recent days, spurred by CME Group’s decision to launch bitcoin futures trading, which in turn resulted in a record 100,000 new users joining America's largest crypto exchange, CoinBase.

The business model pivot comes as much of China’s trading volume has migrated to nearby Hong Kong and South Korea in the weeks since the shutdown. Whether they will be able to lure most, or some, of it back to the mainland under the watchful eye of Chinese authorities remains to be seen. Meanwhile, after dominating bitcoin trading volumes as recently as one year agom China has become a non-factor in recent months for obvious reasons, with Japan and South Korea emerging as China's preferred trading proxies for both Bitcoin and Ethereum.


OpenThePodBayDoorHAL overbet Sat, 11/04/2017 - 15:00 Permalink

Bitcoin meets all four tests to be classified as a security, wait until you need to do a suitability questionnaire and exchange a prospectus in order to buy one, LOL yeah it's the great new internet money, here can you pls sign this form before you can pay me for that coffee LOL.It's a security folks. That's OK, it's a "thing that can go up", but the great new form of money it is not.Around the 18:30 mark the SEC lawyer gets pretty grumpy:  

In reply to by overbet

marysimmons OpenThePodBayDoorHAL Sat, 11/04/2017 - 17:27 Permalink

Right now BTC is close to its ATH.  I can log in to my Coinbase account, and in about 20 seconds, sell 3 BTC.  Tomorrow this will show up in my bank account as about $22K.  I can then take that $22K, go to a car dealership and buy a new car.  A new car has value. What started out as 3 BTC the day before, is now a new car.  BTC is without a question a store of value.Now, what if the dealership accepted BTC directly as payment.  I could go to the dealership right now, buy a new car, and transfer my BTC to the dealership's wallet.  Supposing the owner of the dealership can buy new inventory, pay his employees, and pay for upkeep directly with BTC.  And supposing he can make a BTC loan online and use that borrowed BTC to expand his dealership.  Ooops... looks like we may not need banks anymore, doesn't it?  Now suppose the token used is not BTC, but is 100X's faster, cheaper, more private, and scalable than BTC.  When Amazon starts accepting BTC as payment, and other digital tokens soon after that, it will be hard to argue that these are not currencies - currencies with no middle man.

In reply to by OpenThePodBayDoorHAL

Buckaroo Banzai OpenThePodBayDoorHAL Sat, 11/04/2017 - 17:36 Permalink

Wow, what a surprise, the SEC is trying to classify it as a "security". I guess when you're holding a hammer, everything looks like a nail. Given that securities represent an ownership stake in something, or a financial obligation of some sort, it's hard to understand how BitCoin could possibly meet either of those definitions. When you own a BitCoin, you own a BitCoin, and nothing else--it conveys absolutely no other rights or obligations. The people in the linked YouTube video are a bunch of assclowns in fancy-dress.BitCoin is exactly what it appears to be: a currency. There's a good reason why the CME is putting BitCoin on its currency futures exchange, instead of treating it as some form of commodity or stock.

In reply to by OpenThePodBayDoorHAL

USisCorrupt tmosley Sat, 11/04/2017 - 13:27 Permalink

I think he got Bitcoin and the Dollar confused.The Dollar is Dying and the sooner you realize it the better off you will be.Bitcoin to a MILLION!Granted Bitcoin will fall back Temporarily after the fork then it will be off to $13,000 PLUS by February / 18 MARK MY WORDS!Try adding up all 4 BitCoins now in exixtence and I have ALL of mine in physical prior to the 1st fork on Aug 1st, heck I still have my Casascius Bitcoins!

In reply to by tmosley

HRClinton svayambhu108 Sat, 11/04/2017 - 14:35 Permalink

I bought my BTC years ago. Like I said several times here: "When I trade (whatever fraction of) my BTC into fiat currency, it will be offshore and outside of US and IRS Jurisdiction."It will not be converted into USD. Probably into a mix of CNY, HKD and JPY. Maybe RBL too.My tax exposure will be "legally compliant" (LC) with whatever "Tax Friendly Jurisdiction" (TFJ) to which  I plan to declare my Capital Gains as its new Legal Resident. It will probably be in the name of an LLC that I'll also create offshore. 5-10% taxes, bitchez!  All 110%* legal.   * Cause everyone knows that you can't go higher than 110%, which is like the "11" setting on a power amp.  ;-)Duck you, USSA-IRS!  If you like your socialist taxes, FBO bottom-end and top-end parasites, you can keep your socialist taxes and Gestapo collection methods.  :-)

In reply to by svayambhu108

Rhetorical svayambhu108 Sat, 11/04/2017 - 21:06 Permalink

So relaxing though. Just watching it rise up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up and up   that being said I own COSS mostly Im out of BTC to risky the last 10-20% isnt worth it Sg2x is gonna be a fucking bloodbath and wreck the community for weeks.

In reply to by svayambhu108

HRClinton FreeShitter Sat, 11/04/2017 - 14:49 Permalink

You ALWAYS pay. Only the currency, the amount and Agreement varies. Pay "pay" you do.By the hour, day or year. Fee, Rent, or long-term Lease. It matters naught.It is only the mind cloud of Middle Class Morality (MCM)* that bedevils, bewitches and bewilders most people. When you attain Clarity, the fog of Social BS disappears from the enlightened mind.* Like taxes (where the Poor can't pay and the Rich won't pay), so too the Lower class can't afford the MCM if they want to get by, and the Upper class (the rich and powerful) choose not to subscribe to the Code that they wrote for the Herd of their Sheep. It's a brutal truth, but true nonetheless. 

In reply to by FreeShitter

BritBob Sat, 11/04/2017 - 13:11 Permalink

Xi seems to do what he likes... China – Argentina – the FalklandsIn tune with Macri's words, Xi Jinping thanked Argentina "the support they have given us for our claim of a single China as we support theirs for the Falkland Islands."  (Telam 17 May 2017)Suppose China didn't take territory in the 19th century? Google: ''Falkland Islands – The Usurpation'' (1 pg) to see why Xi's supporting a lame duck. 

GassedUpOldMan Sat, 11/04/2017 - 13:16 Permalink

Chinese want to load up before the S2X crash. After that I assume all the miners will go back to mining the BTC chain, and LOL at their free S2X bux."Remember remember, the fork in November..."