Laundromats and VPNs: How China’s Crypto Traders Are Evading the Rules
Small investors in China are using an underground network of brokers and go-betweens to skirt the country’s strict rules on cryptocurrency trading. China is officially one of the world’s toughest jurisdictions for cryptocurrencies. Beijing banned crypto trading in 2021, and authorities have since detained, fined and jailed people working in the sector.
Big crypto exchanges founded in China, including Binance, moved elsewhere long before the trading ban, which was the culmination of a yearslong crackdown. But crypto trading remains widespread in mainland China, as traders get around the rules using a mix of location-masking technology, lax exchange controls and secretive meetings in cafes and other public places. Chinese traders received a net $86 billion of cash from cryptocurrency activity between July 2022 and June 2023, according to the blockchain-analytics company Chainalysis.
In a single month last year, they were responsible for around $90 billion of trading on Binance, the world’s largest crypto exchange. The success of the country’s crypto traders in evading the rules shows how difficult it will be for regulators across the world—including in the U.S.—to police the sector. “It’s hard to catch.
There’s a billion people in China. How do you know what they’re buying?" said Bobby Lee, founder of the cryptocurrency-storage service Ballet. Many users in the country still have accounts at crypto exchanges based outside China, which they created before the trading ban.
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