The world has seen how tough the Chinese government has been on bitcoin. In September 2017, it banned all initial coin offerings (ICOs) and shut down all local bitcoin exchanges. Last week, reports say that it is looking into cracking down Chinese mining pools.
Despite all these the government restrictions, the Chinese bitcoin investors have still found ways in order to circumvent the government’s bitcoin trading restrictions.
Business relocation of Chinese cryptocurrency exchanges
Huobi, OKCoin and Huobi have all received a shutdown notice from the government in September 2017. During the government’s investigation into local cryptocurrency exchanges, executives of these exchange platforms have even been stopped from leaving the country.
Fast forward to December 2017, business relocation happened. BTTC China, Huobi and OKCoin were rebranded to BTCC, Huobi Pro and OXex, respectively. They all moved to Hong Kong in an effort to effectively address the continuously growing demand they get from Hong Kong-based bitcoin investors.
Shortly after relocating in Hong Kong, they all started to see a high number of daily transactions from Chinese investors.
Easy business registration in Hong Kong
Chinese investors managed to circumvent Chinese trading regulations after they were able to register a business in Hong Kong.
Apparently, it is relatively easy to set up a business in Hong Kong. Businesses can be created using less than $1,000. Once a business has been created, it becomes easy for business owners to open business bank accounts in Hong Kong’s financial institutions.
Chinese investors started to move their money from their Chinese bank accounts to their Hong Kong bank accounts in December 2017.
Blessing in disguise for Chinese investors
Since Hong Kong has a significantly lower supply to meet the cryptocurency demand from Chinese investors, the premiums in the Hong Kong cryptocurrency market is much higher than in China. In fact, the price of Hong Kong premiums even surpassed the price of premiums in South Korea.
However, this turns out as a blessing in disguise for Chinese bitcoin investors. On January 18, the global price of bitcoin was at around $11,500 but it was traded at more than $13,000 in Huobi Pro. This means that traders during that day could have potentially gained $1,500 after selling one bitcoin.
A report from a finance journalist in Hong Kong stated that even traders outside of China are taking advantage of the golden opportunity the Hong Kong cryptocurrency market presents to them.