To Satisfy Soaring Bitcoin Demand, China’s Exchanges Find A Loophole

It’s been nearly two months since Chinese cryptocurrency exchanges were abruptly shuttered by local regulators, part of President Xi Jinping’s ongoing crackdown on capital outflows and potentially embarrassing or destabilizing market forces in the weeks ahead of last month’s National Party Congress. But now that China’s new leader has cemented his grip on power by installing political allies on the Politburo and successfully lobbying to have his name enshrined in China’s Constitution, the exchanges are taking tentative steps to figure out if it’s safe to do business in China again, and what constraints would apply to their operations going forward.

And while providing an online exchange for fiat-to-digital currency transactions is still expressly prohibited, a couple of the country’s biggest exchanges are rolling out an OTC model that resembles the popular peer-to-peer bitcoin trading website Local Bitcoins, and which will “also support fiat currency transactions.”

Here’s CoinDesk:

Some of China’s top bitcoin exchanges are now shifting to the over-the-counter (OTC) market in the wake of a crackdown by regulators in the country. In announcements made on Oct. 31, bothOKEx and Huobi Pro said they will introduce peer-to-peer trading platforms that support fiat currency transactions, including the Chinese yuan, as an alternative for the country’s domestic cryptocurrency investors.

Based in Hong Kong, the two exchanges had previously provided solely crypto-to-crypto trading since being founded by their respective parent exchanges, Beijing-headquartered OKCoin and Huobi. They will now pivot toward a combination of the existing structure and the direct, peer-to-peer model.

The news confirms what most have already known: that Chinese demand to trade, or rather buy, cryptocurrencies is still as strong as ever, if not more. According to OKEx, the yuan is currently the only fiat currency that is available on its P2P platform; it also adds that it has seen increasing demand from Chinese crypto investors since the exchange crackdown.