Chinese cryptocurrency dealers are looking for ways to avoid the ban

ray considers a loner. While many Chinese close their digital wallets after Beijing has banned investments in cryptocurrencies, he is decided to continue.

ray has already received a message from his cryptocurrency exchange that his account will be closed by the end of the year. But he said: "I am now considering opening an account on a decentralized stock exchange."

China's campaign against cryptocurrencies led to the authorities hired the Bitcoin mining operation in May. This coincided with the advent of decentralized financing or Defi, which enables users without having to act with one another like a bank or a broker, and the blocking difficult.

"I still act regularly with crypto," said a Chinese investor with a bank account abroad. "How can the authorities stop when the industry has developed so that it escaped central control?"

While the strictest enforcement against cryptocurrencies in September, China for the first time banned the crypto exchange in 2017 and Chinese users are gradually moving towards Defi.

According to Chainalysis, a research company, China achieved its highest level in November 2019 in November 2019 and had fallen to 5 percent in June 2021.

In the 12 months to June, mainland china was associated with cryptocurrency activities of $ 256 billion, the highest in Asia, and 49 percent of the total volume were traded via defi platforms. Uniswap, one of the leading defi exchanges, is now the second largest stock exchange in East Asia after transaction volume, said Chainalysis.

While the latest restrictions hold offspring from entering the cryptoma markets, some existing cryptocurrency owners turn to Defi to continue acting.

"Most trade is hired because of the ban," said Deng Jianpeng, director of the financial, science and technology research center at the Central University of Finance and Economics in Beijing. "But there will always be some people who will try to find new investment paths, for example via a foreign platform or over decentralized stock exchanges."

Defi protocols do not have the same “know your customers” obligations such as the more regulated conventional stock exchanges. Henri Arslanian, PWC crypto manager and partner, said that the use of Defi "may be prohibited in China, but is very difficult to monitor in practice", since users are offered anonymity.

Miha Grčar, head of global business development at Kraken, a large stock exchange, said that Defi was a "a little wild west in Krypto". He added that governments are thinking about how they can regulate this, for example by demanding a form of user identification.

In an interview with the Financial Times, Gary Gensler, Chairman of the US stock exchange supervisory authority, warned that the supervisory authorities want to have more authority about defi platforms.

"Many Chinese are now studying how to use Defi, but there is also uncertainty here because the US government is trying to tighten the controls," said Colin Wu, an independent journalist who runs the popular Twitter channel WU Blockchain.

In an interview with the Financial Times, Gary Gensler, Chairman of the US Securities and Exchange Commission, warned that the supervisory authorities want to have more authority about defi platforms.

"Many Chinese are now studying how to use Defi, but there is also uncertainty here because the US government is trying to tighten the controls," said Colin Wu, an independent journalist who runs the popular Twitter channel WU Blockchain.

chainanlysis found that countries such as the USA, China, Vietnam and Great Britain with historically large institutional investors who are armed with large crypto wallets play an oversized role in Defi.

Great owners of crypto-assets are attracted by Defi because it enables them to achieve income from their coins. Users lend their crypto to defi protocols to provide liquidity pools for peer-to-peer loans. In return, investors receive part of the transaction fee or token premiums.

However,

Chinese investors cannot transfer profits from defi protocols to Chinese bank accounts. "The government cuts off the connection between cryptocurrency and Fiat currency," said Zee Zheng, founder and CEO of Spacechain, a company that focuses on space applications for blockchain technology. Zheng, a Chinese entrepreneur, moved into the crypto -friendly Singapore four years ago.

For wealthy Chinese, this is not a problem as long as you can transfer crypto gains to foreign bank accounts and avoid the capital control boundaries.

Several posts in the 51 Bitcoin Forum-one of the informal crypto blogs that have appeared since Chinese social media sites have started to censor content on cryptocurrencies-recommend investors to register a foreign company and apply for a company trade account. Another user provided a list of British and American financial institutions that enable people based in China to open up bank accounts to transfer profits from crypto investments in Fiat currency.

But for many, the additional steps that are necessary to invest in digital currencies are not worth the effort. Zheng said: "The government does not go after one percent that acts marginally. For them, it is sufficient for the restrictions to be strict enough to stop the 99 percent trade."