TL;DR Breakdown
- Regulators set to target OTCs now.
- Why targeting OTCs would not have an effect on BTC price.
Chinese regulators have prepared a new approach towards effecting its planned regulatory crackdown. This time, they intend to target more Over The Counter trading desk towards ousting crypto in the country.
Bloomberg reports that there has been a rise in the number of people who patronize OTCs in the country after China announced its crackdown earlier in the month. They have stopped financial institutions from providing support for crypto users.
The recent move to regulate OTC markets is similar to 2017, when the government placed a ban on crypto exchanges. Despite this, China still controls a large chunk of crypto transactions globally amidst the crackdown, as with analysts estimating China owned 7 percent of the world’s Bitcoin and accounted for roughly 80 percent of trading before the 2017 clampdown.
Recently, China has been fazed with cracking down on the entire crypto space as they imposed restrictions newly on crypto mining farms aligning the move to its carbon neutrality goals.
Several companies, including Huobi and OKEx, have halted their local mining operations and mining services for Chinese customers.
It made mining difficulty fall by 16 percent on Sunday to 21 trillion – its sharpest decline this year. Mining difficulty provides an estimate for the computing power required to produce new BTC.
Why China OTC crackdown wouldn’t affect Bitcoin price
Bloomberg notes that the recent crackdown is likely to make less impact in terms of any dip in the Chinese buying power.
They report that a large number of Chinese traders have flocked to over-the-counter (OTC) platforms.
“China escalated its crackdown after a frenzied surge in Bitcoin and other tokens over the past six months heightened longstanding Communist Party concerns about the potential for fraud, money laundering, and trading losses by individual investors. Yet the hard-to-trace nature of transactions on local OTC platforms and peer-to-peer networks means it will be tough for authorities to enforce a wholesale ban”.
