Chinese cryptocurrency exchanges account for 60% of all stablecoin tether (USDT) trading globally, according to a report released by crypto research firm Diar.
The report revealed that Chinese crypto exchanges have raked in over $10 billion in USDT trading, a whopping sum in contrast to the United States’ $450 million facilitation in 2019. At the other end of the spectrum, Diar lists crypto giants, Binance and Bitfinex, who are reportedly responsible for the remaining amount of Tether traded, about 31%.
For concrete proof, Diar conducted an in-depth analysis to vet the trading volumes, as it is not uncommon to spike numbers and dish out fake volumes. However, the analysis concludes that the trading numbers are not untrue. According to Diar’s findings, the amount of USDT sent and received in China and globally corresponds reasonably, and this suggests that the numbers represent true trading activity and not just phony cryptocurrency cash-outs.
China is still considered to be one of the most important players in the cryptocurrency market, despite the government ban and Diar’s analysis further affirms that notion.
“…the volume coming in and out of Chinese exchanges dwarfs western and global trading venues and accounts for more than half of the total transaction value of known parties.”
A Contradictory Victory
China’s giant strides in the cryptocurrency sector are thoroughly impressive, but it still requires careful scrutiny. How is China getting these numbers despite their stern and unyielding cryptocurrency regulations?
It is worthy to note that financial institutions and individuals are banned from trading Bitcoin and it is outrightly illegal to conduct Initial Coin Offerings (ICOs) in the country. The Chinese media presents cryptocurrencies as criminal tools and any operations associated with it as money-laundering, thus creating negative opinions and beliefs about it to their general public.
These restrictions only move Chinese investors to seek out alternative trading options, such as peer-to-peer platforms where they can anonymously trade cryptocurrency for cash. In late 2017, amidst crypto’s bullish run, China banned retail cryptocurrency trading. LocalBitcoins, which has recently closed the option for such P2P trades, benefited greatly soon after the ban was implemented, as they saw their trade numbers hitting as high as 115 mln yuan ($17.8 mln), as at September 2017.
To add to the tensioned list of restrictions surrounding cryptocurrency in China, the Cyberspace Administration of China (CAC) introduced new anti-anonymity regulations for blockchain firms operating in the country.
The guidelines published on the CAC’s website require blockchain startups to allow authorities full access to stored data, and to introduce registry procedures that would require some form of tracking and identification (such as ID card or mobile numbers) from its users.
The Chinese government is also now considering a nationwide ban on mining bitcoin and other cryptocurrencies, a move that will deal a fatal blow to the crypto market, because China has been and still is the epicenter for both the manufacturing of bitcoin mining hardware and the operation of bitcoin mining pools.
While there have been notions that the Chinese government’s efforts to curb the cryptocurrency industry in the country are fueled by safety and security measures, crypto watchers are speculating that all is in a bid to acquire total control of a booming industry, just like they did with the internet. Whichever way it is leaning, restrictions are definitely not reducing the growth of the cryptocurrency industry in China.