Reports suggest that more and more Chinese investors are seeking exposure to cryptocurrencies via Hong Kong-based exchanges like OKX and Binance, as well as through over-the-counter and other grey-market peer-to-peer channels.
Despite the crypto ban in China since 2017, Chinese investors are seeking exposure to Bitcoin and other crypto assets amid the country’s ailing stock market. As per the Reuters report, in the period between July 2022 and June 2023, the Chinese crypto market registered $86.4 billion in trading volumes. Interestingly, this is separate from the $64 billion trading volumes registered in Hong Kong during the same period.
Amid China’s ailing economic conditions, top players from Shanghai’s finance sector have decided to diversify their investments by moving a significant portion to digital assets. Speaking to Reuters, some Chinese investors also termed Bitcoin as a “safe haven”. Besides, some of them also disclosed that they hold cryptocurrencies worth a few million yuan.
As China’s property and stock markets go downhill, investors are seeking refuge in crypto in order to protect their capital. However, operating in a country with a crypto ban comes with its own set of challenges. Thus, Chinese investors explore different platforms like crypto exchanges OKX and Binance, as well as over-the-counter terminals in order to buy/sell Bitcoins. These exach among other platforms, facilitate transactions through fintech platforms like Alipay from Ant Group and WeChat Pay from Tencent.
Some investors have been also leveraging Hong Kong’s crypto-friendly stand. Chinese individuals are increasingly channeling funds into cryptocurrency accounts in Hong Kong by utilizing their $50,000 annual forex purchase quotas, primarily intended for purposes such as overseas travel or education. As a result, several Hong Kong-based crypto exchanges have also reported a strong influx of investors from mainland China, reports Reuters.
Chinese Officials Encourage Crypto Trading in Hong Kong
The sharp fall in China’s property market, as well as the decline in its stock market, have pushed investors to explore other alternate avenues for investments. A strong surge in the Bitcoin price and the broader crypto market last year, make them an attractive option.
Some market observers also believe that amid the current ailing condition of China’s economy, Chinese officials are endorsing crypto trading in Hong Kong, citing major opportunities in the crypto sector. This way, China also seeks to maintain its influence in the global crypto market.
As per the Chainalysis report, the current developments raise speculations regarding the growing involvement of China’s government in the crypto sector. As we know, Hong Kong is proving to be a testing ground for the same.
Despite facing regulatory challenges, the increasing interest in cryptocurrencies among Chinese investors aligns with a broader trend.