Even though digital assets are illegal in China, recent searches by the authorities have uncovered large-scale unlawful transactions utilizing these assets.
In spite of China’s digital asset prohibition, Bloomberg reports that recent police searches in China aimed at illegal foreign currency operations have shown the continued usage of cryptocurrencies.
These moves demonstrate the country’s ongoing interest in cryptocurrency for a variety of reasons, including as the need for alternative investment vehicles and the need to avoid capital restrictions.
Local governments and state-run media outlets brought attention to many noteworthy cryptocurrency-related instances in May alone. Among them were an underground bank that handled 13.8 billion yuan ($1.9 billion) in illicit transfers, a gang that was engaged in almost 2 billion yuan in unlawful conversions, and illegal money changers whose operations surpassed 1 billion yuan. All the way from the city of Chengdu in the southwest to the province of Jilin in the northeast, the busts stretched over Beijing.
Concerns about money laundering, currency outflows, and the environmental effects of energy-intensive Bitcoin mining led to the first deployment of China’s digital asset prohibition in September 2021. Regardless, there is still a substantial amount of illegal cryptotradinge taking place among Chinese residents.
In the twelve months leading up to June 2023, blockchain analytics company Chainalysis estimates that almost $86 billion worth of bitcoin entered China. Even if this is lower than what it was before the prohibition, it is still a significant drop on a worldwide basis.
There are a number of ways to avoid discovery that let crypto trade in China continue. In order to do business, traders use location-masking software and peer-to-peer messaging apps like WeChat and Telegram. Enforcement operations are further complicated since some people use intermediaries to set up corporations overseas in order to fulfill the KYC requirements of crypto exchanges.
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