Following China’s plan to crack down on Bitcoin mining and trading, crypto traders are turning to over-the-counter (OTC) trading desks.
A report published by Bloomberg on Monday confirms that there has been a significant increase in the usage of OTC platforms since Chinese regulators announced plans to clamp down on crypto in May. Although the data does not give an exact volume since OTC transactions are peer-to-peer, the exchange rate between the Chinese Yuan and USDT stablecoin was used to gauge the local market sentiment.
That being said, the demand for USDT has climbed amid the market downturn. According to Bloomberg, the USDT/CNY trading pair fell by 4.4% on China’s announcement in May. However, the pair has recouped more than half of its loss, suggesting that the peak selling phase may have passed.
Some experts say that China’s move to suppress the crypto industry is due to capital outflows. Bloomberg, in its report, speculates that OTC trading may not carry the same capital flight risks as a typical crypto exchange. Consequently, regulators may be forced to overlook the sector.
Because the yuan leg of [OTC] trades takes place entirely within China’s domestic financial system, the risk of large-scale capital outflows is low.