China's Cryptocurrency Market Flourishes Underground Despite Stringent Trading Ban, Reports WSJ

China stands as one of the world's most rigid regions when it comes to crypto trading, with authorities actively pursuing individuals involved in the sector, resulting in detentions, fines, and imprisonment.

Despite the risks, WSJ notes that some Chinese traders remain undeterred. Bitfarms' Chief Mining Officer, Ben Gagnon, revealed in an exclusive interview a discreet resurgence in crypto mining in the region, facilitated by energy capture technology in residential housing.

Citing Chainalysis data from an October report, the Journal highlighted that Chinese traders received a net of $86 billion from crypto transactions from July 2022 to June 2023. Their monthly trading volume on Binance reportedly reached around $90 billion.

Chinese traders reportedly maintain access to accounts on foreign crypto exchanges established before the ban, employing virtual private networks (VPNs) to conceal their locations and bypass geo-restrictions. Additionally, social media platforms like WeChat and Telegram are used for peer-to-peer crypto trading, allowing traders to find buyers and sellers through dedicated groups.

Physical trades are common, especially in inland cities like Chengdu and Yunnan, where enforcement is less strict. The Journal reports that traders often meet in public spaces, such as cafes or laundromats, to exchange crypto wallet addresses or conduct transactions through cash or bank transfers.

Despite its history as a crypto trading and mining hub, China maintains a rigid stance on cryptocurrency. While the country advocates for blockchain applications in areas like digital identities, livestock tracking, and luxury product authentication, it insists on using private blockchains rather than the decentralized ledgers typical of web3.

The persistence of crypto trading in China, despite bans, underscores the decentralized and global nature of cryptocurrencies. It also highlights the challenges governments face in controlling blockchain-based digital assets. Nevertheless, China continues its efforts to tighten control over cryptocurrency usage.