Crypto faithfuls in China are seemingly indifferent about the crackdown on cryptocurrency transactions as they have resorted to Over-the-Counter (OTC) methods to trade digital assets. The traders are brushing past regulatory requirements by employing OTC trading decks. Methods such as peer-to-peer and third-party payment have become popular options.
Bloomberg reported on May 31st that the increasing use of OTC methods were triggered after China announced the ban. The crackdown also affected financial institutions that were no longer allowed to run crypto-related transactions.
The recent ban also saw mining operations in the country hitting a slight dead-end. This is in a bid for the Chinese government to hit it’s carbon neutrality goals. Trading platforms Huobi and Okex have paused crypto mining and transactions.
As an aftermath, Bitcoin mining difficulty has declined on Sunday by 16 percent to 21 trillion. The BTC mining difficulty is lowered once there is less blockchain competition for block rewards, signifying that several Bitcoin miners have suspended mining operations.
Increasing Exchange Rate Between China’s Yuan and USDT
The cryptocurrency market has seen the general market cap fall by over 40 percent in recent weeks due to the speculations that revolved around Bitcoin. However, while some sellers are seeking ways to reduce the risks, several others are gathering more cryptocurrencies via OTC methods.
To imply the growing adoption of over the counter transactions, the exchange rate between the Chinese Yuan and Tether which fell by almost 4.4 percent earlier this month has risen to half its value before the crackdown. This suggests that a lot of transactions are running through with OTC desks.
However, despite that OTC methods allow crypto tradings in private manner, it still poses some risks. Chinese regulators have notified financial institutions about their requirements to pick out accounts that are running suspicious transactions and block them. These transactions run in the form of money laundering and cryptocurrency transactions.