Just as the Chinese government continues to look for new ways to stop crypto trading, traders are also looking for new ways to keep trading.
According to a local news source, traders are now relying on Virtual Private Networks (VPNs) and stablecoin Tether to enter and exit the markets at will. This allows traders to trade on foreign exchanges with little or no barrier.
Explaining how this is done, the report mentioned that the traders would first have to convert the local currency ‘yuan’ to Tether, which is less volatile than Bitcoin. Once Tether is received, traders can then trade crypto to crypto on exchanges through the aid of VPNs.
“Much like an online merchant would sell their goods on an e-commerce website, two individuals who have both completed a “know-your-customer” procedure with an exchange would swap “fiat” currencies, or legal tender of a government, to Tether,” read the publication.
The exchange would then play the role of an “overseer” for such trades and will look to correct cases of failed trades, or transactions that are not honored.
Chinese Crackdown on Crypto May Never Be Complete
Giving the decentralized nature of the internet and cryptocurrencies, implementing an outright ban on cryptos seem nearly impossible. Smart traders will continue to rely on VPNs and P2P networks to exchange assets.
With regards to VPNs, Sources told South China Morning Post that “Chinese regulators definitely have the technical ability to shut down VPNs.” However, the process would be a very long one since it would require “numerous conversations with different stakeholders to reach a consensus on configuring a firewall”.
This invariably lengthens the process of cracking down cryptocurrency trading within China and will only make traders devise new ways to circumvent the regulatory rules.
Just like many world jurisdictions such as Malta and Switzerland has found out, creating a safe haven for the growth of cryptocurrencies is a more viable option than trying to stamp it out. The Chinese authorities will likely continue to miss out on revenue generated by the crypto industry.
New and existing blockchain projects would also have fewer reasons to continue to operate in a country where it is difficult to conduct ICOs or transfer native tokens of their projects.
Is the Chinese government losing more than it is gaining by banning crypto trading?