Cryptocurrency News

Chinese Investors Defy Crypto Ban – Secretly Buy ICO Tokens

Speculation that China’s blanket ban on cryptocurrencies and outlawing of digital currency exchange platforms would simply drive the industry underground is proving exactly right, as a local Chinese news outlet reports that ICO investing is rapidly gaining in popularity.

Last week, Chinese news outlet Sina News became the latest such media platform to “snitch” on what is rapidly becoming a popular yet risky phenomena – ICO (Initial Coin Offering) investing. While such a practice in the US and Europe has become passé, due to the huge numbers of cryptocurrencies launched in the last few years (currently almost 2,000), in China, where cryptocurrency is all but banned, it is a means of keeping abreast of an industry that a large percentage of the Chinese population is obsessed with.

Bitcoin OTC Operations

So how are these ICO purchases being made? According to the Sina News, secret Bitcoin OTC (Over The Counter) operations have been popping up all over the place, doing as much business as they dare, then moving on. The majority of these OTC operations are basically shell companies that have been registered overseas, in order to bypass the unwanted attention of the authorities.
The Sina News claims that these operations employ multiple methods of covering their tracks,  with the creation of offshore holding companies the easiest and most practical.
China’s Crypto Obsession

Many in authority in China look at cryptocurrency as a potentially destabilizing element in society, and they could be right; thus far, even banning its use has done little to curb the country’s crypto-obsession.

In recent months, the Chinese government has compelled everything from big business to social media to get on board with their official anti-crypto stance. However, like a girl being warned off her bad-boy beau by her concerned and controlling parents, such blanket restrictions have only served to increase the general Chinese public’s fascination with cryptocurrency.

China’s Crypto-Powered Black Market

While officially, China doesn’t have a cryptocurrency market, unofficially it is among the biggest in the world. Before their banning, China’s exchanges were among the biggest in the world, and some such as Huobi and OKCoin managed to move their operations abroad and keep trading.

But what is the driving force behind China’s crypto obsession? It’s not like the average citizen can spend their Bitcoin in the local supermarket. The truth is, in a country whose citizens are becoming increasingly monitored on multiple levels, the anonymity of cryptocurrency has enabled the formation of a vast “black market”, powered by China’s ever-increasing asset-class of young, wealthy and strong-willed citizens.

So there we have it; the average middle-class Chinese who wants to pay the builders working on his house extension the equivalent of tax-free “cash in hand” can do so by paying them in cryptocurrency. Later, when he sells his house, a large chunk of its sale can be paid off the books in crypto.

The trouble is, the Chinese authorities are only too aware of this crypto-powered black economy, and the only way they will be able to control it will be by implementing even stricter penalties for those who break the law.

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