The Chinese government is ramping up its crackdown on crypto with a ban on virtually all trading activity in the country, including trades between different cryptocurrencies and any trades taking place on exchanges.
Even as trading volume is likely to fall precipitously — several large exchanges have already effectively shut down in the country — crypto-holders could continue to hold and even exchange their holdings in the over-the-counter or off-exchange market.
“I do think you’ll see people continuing to hold, and I do think you’ll see people creatively liquidating, or just transferring the entire value of their wallets to someone else,” said Adam Lowe, chief innovation officer at Arculus, which develops crypto wallet technology.
One way they could continue to exchange crypto, theoretically at least, is by selling passwords or keys to private wallets for a set value. While this is much less efficient than trading over highly centralized exchanges, investors in China who already have large investments in crypto have a clear stake in finding a way around new regulations.
“I think you’re going to see people be incredibly creative,” Lowe added. “You can look at any time a nation state has made something illegal that has very high demand, like the Prohibition era in the United States.”
