Cryptocurrency Ban In China

Cryptocurrency ban in china

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Although there has been somewhat of a frenzy surrounding cryptocurrencies in the last few years, certain countries, such as China, have outright banned the use of cryptocurrency, as well as any type of crypto-related events within the country.

But while the country’s government may not be too excited about cryptos, there are thousands are investors and traders in the country who still want to participate in this young and booming industry.

Cryptocurrency ban in china

In the following article, we’re going to look at how traders can bypass the restrictions on cryptocurrencies in China. The safest way to get around these restrictions is to use a VPN to route your device’s traffic through a secure server.

There are many benefits of a VPN.

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However, being able to access content, that would otherwise be blocked, is one of the most prominent features that attract people to using VPN services.

China’s Ban of Cryptocurrency

With the world’s second largest economy, China has been a main focal point in the crypto-industry ever since Bitcoin was first created by Satoshi Nakamoto back in 2009.

However, the industry took a hard hit in 2018 when the country banned all digital currency activity and requested that local banks prevent their customers from being able to exchange their fiat currency for it.

By August 2018, the government had even gone further and instituted a ban on several popular communication channels, where people were simply discussing the cryptocurrency markets and its news.

Cryptocurrency ban in china

This resulted in several prominent Chinese-based trading platforms being shut down, leaving Chinese crypto-traders without any means to access digital currencies.

Why China Banned Cryptocurrency?

To this day, China remains very vocal and persistent about attempting to block any form of cryptocurrency trading within the country. The ban was set in place due to the belief that the country’s central authority should be the only entity able to create and issue currency.

Cryptocurrency ban in china

Additionally, China has also instituted geo-restrictions on all websites that offer access to ICOs, or Initial Coin Offerings, as well as shutting down any payment services that accept cryptocurrencies such as Bitcoin.

Still, despite the government’s efforts, creative traders and crypto-investors still manage to be a vital member of the growing global cryptocurrency marketplace by using a few simple tricks.

How to Bypass China’s Crypto-Restrictions

Fortunately, there are still a few ways that traders can get their hands on cryptocurrencies, even from within Chinese borders.

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Let’s take a look at a few of the ways traders can still use cryptocurrency in China.

Using Tether

One popular method used by traders for getting around the Chinese ban is to leverage a stablecoin, known as Tether (USDT). The price of Tether is tied directly to the price of the U.S. dollar, making it easy for Chinese traders to enter and exit the crypto markets.

Exchanges Operating Outside of China

The primary method used by trading platforms to bypass the Chinese ban of cryptocurrency is for them to operate from outside of China.

By creating a legal entity based outside of the country, exchanges are still able to operate legally, despite the local ban on cryptocurrency.

Why China Banned Cryptocurrency?

Proxy Websites

Proxy websites act as middlemen between a person’s computer and the internet. Basically, instead of visiting a cryptocurrency website directly, you’ll first visit the proxy website, which will then access the cryptocurrency website for you.

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When using a proxy site, your computer or device’s traffic will be routed through the website’s servers. Therefore, if the proxy site’s servers are located in the U.S., where cryptocurrency trading is allowed, you’ll still be able to access websites that would otherwise be blocked to Chinese citizens.

China is moving to eliminate all cryptocurrency trading with a ban on foreign exchanges

Using a VPN or Virtual Private Network

Another popular method that allows Chinese traders to circumvent the government’s ban is to use technologies such as VPNs.

VPN services, essentially, mask your IP address, in turn, hiding your online activities from the government authorities.

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Although Chinese officials have the ability to shut down crypto-traders that use VPNs within the country, it remains unclear how they could identify that particular traffic, without interrupting all other uses of the VPN at the same time.

Therefore, by using a VPN to perform peer-to-peer transactions, there’s little the Chinese government can do to prevent the trade of cryptocurrencies.

VPN to use for these needs - NordVPN.

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More about it on a review of NordVPN.

Bypassing the Crypto Ban

Today, these methods remain the only way for Chinese citizens to be able to trade cryptocurrency. These loopholes continue to thwart the government’s efforts to suppress all cryptocurrency trading in the country.

While the ban hasn’t completely stopped trade, it has had a significant effect on trade volume. In fact, after the government shut down more than 120 exchanges, Bitcoin’s global trade volume dropped by about 30%.

But, as exchanges and traders learn to adapt to these regulations, trade volumes are slowly making their way back to normal.

China’s Ban of Cryptocurrency

This just goes to show how much of a pivotal role Chinese investors play in the cryptocurrency markets and that even though the government is trying to prevent it, there’s no way to stop the trade of decentralized digital currencies.

Written by Melvin Draupnir on January 22, 2019.