Investing.com - Chinese investors are still trading bitcoin and buying initial coin offerings weeks after authorities announced that domestic exchanges would be shut down, indicating that Beijing is struggling to crack down on cryptocurrencies
Market watchers had feared the Chinese ban on cryptocurrency exchanges would lead to a sharp drop in demand for bitcoin, given China has been a key source of demand. Instead, trading volumes in the private over-the-counter market have grown significantly.
The yuan dominated share of OTC bitcoin trading has risen from around 5% in early September, before exchanges were shut, to about 20% a month later according to a report by the National Committee of Experts on Internet Financial Security, a government-backed research group.
Chinese investors are using mobile messaging platforms to connect, negotiating one-on-one transactions without the help of an exchange, the report said.
The clampdown is proving more challenging for bitcoin miners, as China’s OTC market is still not liquid enough to allow them to facilitate the sale of hundreds of thousands of dollars of newly-minted bitcoin each day.
Initial coin offerings are still being marketed, though the obstacles facing Chinese investors wanting to take part are now larger.
According to reports in the Wall Street Journal, Chinese regulators decided to issue the ban on exchanges because people were using bitcoin to bet against the value of the yuan and move money outside the country.