Chinese government announced about shutting down public cryptocurrency exchanges in September. The claim affected a lot of Bitcoin traders as China is considered to be the main demand market for Bitcoin cryptocurrency. Today, several months later, Chinese dealers continue buying, selling and exchanging cryptocurrency as well as participating in different ICOs.
According to reports of an authority-supported analytic agency, the National Committee of Experts on Internet Financial Security, the Chinese renminbi share of Bitcoins has increased from 5% before the limitation to 20% just thirty days later. It means that the limitation has actually facilitated the OTC trade within the competing and liquid marketplace.
To explain the failure of the Chinese Authorities anti-bitcoin policy it is essential to understand the underlying technologies. Investors of China as well as other participants around the world use mobile chat services to interact with traders as well as to negotiate without resorting to the use of exchanges. The main instruments are widely popular WeChat, Tencent services as well as Telegram which is claimed to be the most protected and secure messaging platform.
Along with that, stringent prohibition of Chinese authorities affected miners as they were forced to migrate to distant regions of Gansu as well as Inner Mongolia. These areas became the most appropriate regions for miners due to low-cost electricity powering large amount of computing systems producing Bitcoins.
According to the experts, bitcoin market of China can’t provide opportunities for selling millions of American dollars of produced cryptocoins on the everyday basis.
Thomas Glucksman, a bitcoin exchange and initial coin offering underwriter, believes that miners from China are yet to face challenges and difficulties due to the ways of conducting payments for staff and operational purposes, as they are forced to use renminbi. To find a settlement of the problem they have to shift the operations or facilitate renminbi cash-out utilizing the means over-the-counter marketplace offers.
Although ICOs are still available for Chinese participants, the limitations are strengthening even further. Of course, bitcoin and ethereum tokenholders are still able to participate in ICO projects using foreign platforms. Nevertheless, lots of international ICO services have toughened their personal data requirements to prevent difficulties with censorship. Added to this is the fact that some ICOs have excluded Chinese versions from their web resources.
Chinese ICO limitations have caused some extra demand for bitcoins because a large amount of sponsors were forced to move in order to accomplish governmental requirements.