The government of China is imposing strict financial regulations to thwart the crypto boom. Amid the governmental crackdown, the crypto traders of China are trying hard to bypass the stringent rules by resorting to the Over-The-Counter (OTC) desks for cryptocurrency dealings.
According to the Bloomberg report of 31st May, there has been a significant surge in the usage of OTC trading platforms ever since the crackdown imposed by the government in China. The latest regulations implemented by China were made to prohibit payment firms and financial institutions from offering crypto trading services. According to the transaction estimate report of OTC trading desks, the exchange rate between the Yuan of China and USDT has fallen by 4.4% ever since the regulatory crackdown. However, there has been a slight recovery in the exchange rate as well due to the consolidation of the crypto markets through OTC trading.
The shift to OTC trading is similar to the situation of 2017 when the government had imposed the first ban on crypto trading and investment in China. With the imposition of the regulations, several crypto companies like OKEx and Huobi have locked down upon their cryptocurrency mining operations and have stopped offering mining services. The crypto ban regulation resulted in a dip in the mining of Bitcoin by almost 16%, and today the amount of Bitcoin in circulation stands at 21 trillion.
At present, the risks of massive capital outflow have decreased in China owing to the OTC trading in the Yuan taking place within the domestic financial system of China. According to the financial reports of Bloomberg, the OTC trading does not inflict the economy with capital flight risk that is usually associated with conventional cryptocurrency exchange forums. Such a scenario conveys that the regulations imposed by the government upon crypto trading services are not extremely stringent.