China’s government’s regulatory attempts to suppress the cryptocurrency have led the traders to work over-the-counter trading desks.
Bloomberg’s article published on Monday stated that ever since China has announced the latest crackdown, the restrictions have been stricter for companies dealing in cryptocurrencies. This has led to a sudden rise in OTC platform usage. While it is hard to determine the exact volume, considering Chinese OTC transactions happen peer-to-peer and use third-party payment platforms. The demand for USDT has increased during these market downturns.
Bloomberg’s report also stated that USDT/CNY has been able to recover more than half the losses ever since the crackdown was announced earlier this month. But the recovery also shows the peak selling time has already passed as the markets had started to consolidate.
OTC trading may not have the same capital risks associated with typical exchanges. This also means that the regulators may not be so strict while dealing with this sector for now. This is major because the yuan leg of all OTC trades happens within China’s domestic market where the risk of any large-scale capital outflow is very less.
This situation is a remembrance of 2017 when China had first banned on cryptocurrency exchanges. However, Chinese traders still have a major share of the global trade today for cryptocurrency despite such a setback. This new crackdown has seen crypto-mining being halted to align with China’s carbon neutrality goals.
All this has led to Bitcoin’s mining falling by 16%, the sharpest decline reported this year. And such difficulty provides for computing powers to produce new BTC.