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Chinese Crypto Exchanges Suspended Contract Trading, Traders Flock to OTC Desks

Published May 31, 2021 | Updated May 31, 2021

In Brief
  • Local exchanges have banned Chinese nationals from opening up any new contract positions in the crypto market.
  • Many Chinese traders flock to OTC desks or peer-to-peer trading platforms to bypass the regulatory restrictions.
CHINA bitcoin

Chinese Crypto Exchanges Suspended Contract Trading, Traders Flock to OTC Desks

  • Local exchanges have banned Chinese nationals from opening up any new contract positions in the crypto market.
  • Many Chinese traders flock to OTC desks or peer-to-peer trading platforms to bypass the regulatory restrictions.

China’s recent crackdown on crypto miners and traders has forced local crypto firms to withdraw their operations partially. In the latest development, Chinese journalist Wu Blockchain reports that owning to the regulatory changes, BitMart has decided to suspend contract trading services for all its users.

All the previous transactions can be closed, however, no new transactions can be opened. Thus, it is not possible for new users to open contract services as they won’t be able to transfer assets to contract wallets.

Post the Chinese crackdown, the state-sponsored media in China has severely criticized high-leverage futures trading. The top four global futures exchanges have been operating out of China namely Huobi, Bybit, OKEx, and Binance. Reportedly, Huobi has been most affected from China’s policy and has completely banned new users from choosing the futures trading feature.

In a blog post last Thursday, May 27, OKEx noted that the recent crackdown only aims to bring tough policies. However, Chinese national users can continue to hold and use cryptocurrencies.

OKEx director Lennix Lai said that China hasn’t outlawed the ownership of digital currencies by its users. The crypto exchange added:

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“China is going to be more strict on exchanges and mining operations, but people can still use and hold cryptocurrencies in general, including Chinese nationals.

In addition, exchanges such as OKEx have scaled back some services and products offered to Chinese nationals only. Any changes due to this notice are not impacting non-Chinese nationals, and will only affect users who reside in China and use the Chinese currency renminbi”.

Chinese Traders Flock to OTC Desks

As per the recent Bloomberg report, a large number of Chinese traders have flocked to over-the-counter (OTC) platforms. The recent report notes:

“China escalated its crackdown after a frenzied surge in Bitcoin and other tokens over the past six months heightened longstanding Communist Party concerns about the potential for fraud, money laundering and trading losses by individual investors. Yet the hard-to-trace nature of transactions on local OTC platforms and peer-to-peer networks means it will be extremely difficult for authorities to enforce a wholesale ban”.

Thus, Bloomberg notes that the recent crackdown is likely to make less impact in terms of any dip in the Chinese buying power.

Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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Bhushan Akolkar 533 Articles
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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