Despite China's infamous blanket ban on cryptocurrencies, Initial Coin Offering investing is making a resurgence in the country as Bitcoin Over-The-Counter exchanges gain prominence, reported local outlet Sina News on Sept. 26.OTC Market Fueling China's Crypto Craze.
Most OTC providers are overseas-registered "Shell" companies that bypass local supervision of the cryptocurrency market.
Such firms provide their services to customers regardless of the strict banking laws in place by Chinese banks, such as People's Bank of China which recently stated it strives to protect investor interests from "Digital trading risks."
As corporations-even social media players-and government bodies join forces to curb cryptocurrency investing in China, the citizens' lure towards digital tokens means a black market for the rising asset class is forming.
Importantly, it was observed that the cryptocurrency plunge in 2018-which saw over $600 billion leave the crypto market-has not deterred the purchase of ICO tokens in the Chinese Renminbi.
Platforms like CoinCola and OTCBTC have been pointed out in particular for allowing the purchase of bitcoin via Alipay, WeChat, or bank wire, after which a customer can purchase obscure ICO tokens via an inbuild crypto-to-crypto platform.
The availability of reliable Virtual Private Networks makes accessing OTC networks an easy task, and investors connecting with like-minded individuals on Telegram groups and other English media channels.
Several frauds without an actual token use the "Blockchain" buzzword to attract and deceive unknowing investors.
Overall, Sina estimates there are 264-such ICO projects operating in China, available for trading on local exchanges like Gansu, but each one having questionable origins and "Break rates" of 98.8 percent.
Li Honghan, a researcher at the International Monetary Institute of the Renmin University of China, that ICO firms falsely market their projects to lure retail investors while teaming up with marketing firms to create hype and "FOMO" for their tokens.
Despite Ban, Chinese Investors Continue to Buy ICO Tokens via Bitcoin OTC Providers
Published on Sep 28, 2018
by Cryptoslate | Published on Coinage
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