A Crack In the Great Wall: The Return Of OTC Cryptocurrency Trade in China

As Chinese authorities renew their assault on cryptocurrency, there remains one major loophole for ravenous traders. To date, over-the-counter (OTC) cryptocurrency trade remains legal – and ostensibly unrestricted. Even while Chinese authorities force the country’s largest virtual currency exchanges to end domestic trade, the people’s republic of crypto cannot be stopped. As exemplified by the high yuan volume on LocalBitcoins, OTC trade is the people’s salvation. The peer-to-peer platform is emblematic of bitcoin itself, as citizens have bypassed government to transact with one another directly.

During the week of September 16, 2017, the volume of Chinese yuan exchanged on LocalBitcoins reached an all-time high. According to coin.dance, last week on LocalBitcoins, we witnessed the exchange of more than 115 million yuan (approximately $17.4 million USD). The last time the decentralized platform experienced this level of activity was earlier in 2017, during the Chinese government’s withdrawal freeze. The freeze and uptick in OTC crypto trading coincided almost perfectly, lasting from February 2017 to May 2017. When exchanges resumed business as normal, it seems that cryptocurrency holders returned to their usual platforms (that is, until now).

Over the last two weeks, global volume on LocalBitcoins has also reached all-time highs. This can be explained in part by the size of the Chinese market itself. Also, there’s a clear upward trend in OTC cryptocurrency trading, which dates all the way back to 2013. This might be a result of the increasing price of the underlying asset (ceteris paribus, as the price of bitcoin rises, so would the volume of exchange).

In all, OTC trading has become a safe haven for cryptocurrency traders. The whims of government may change week to week or even day to day, but cryptocurrency remains a tool of the people for the people.