How Chinese Skirt Cryptocurrency Ban

Citizens of China still put up their funds into Bitcoin and crypto market despite all restrictive measures taken by authorities.

In September 2017 Chinese crypto exchanges BTCC China, Huobi and OKCoin were closed by the government. For some time senior executives of the three exchanges got foreign travel ban for governmental investigation of local cryptocurrency companies.

Three months later, in December 2017, the three largest crypto stock markets moved to Hong Kong with BTCC China, Huobi and OKCoin renamed as BTCC, Huobi Pro and OKEx respectively. They planned to meet boosting demand from Hong Kong investors.

Soon after relocation, the trading platforms saw daily volumes from Chinese investors increasing exponentially. At any rate the investors managed fudging on trading restrictions in China using Hong Kong exchanges. But how on Earth is it possible?

Hong Kong investors can build up business quite easily. In the legal sense it costs less than $1000 which allows for setting up an account in financial centers of Hong Kong. Since December 2017 a great number of China investors have transferred funds from Chinese accounts to Hong Kong ones and initiated more active cryptocurrency trading so getting around restrictions imposed.

Yet Hong Kong has got less supply for satisfying growing demand with China housing large miners like Bitmain. Thus extra charges on Hong Kong market have soared and exceeded those in South Korea. On January 18 with world average Bitcoin price about $11500 it cost more than $13000 at Huobi Pro.

Crystal Hu, financial journalist from Hong Kong, noted traders outside Hong Kong also started making use of arbitral procedures provided by this market. For instance, on January 18 Coinbase Bitcoin price amounted to $11800 so buying it there and selling at any Hong Kong market would afford $1200 profit.