Despite the Chinese government's attempts to ban individual investors from trading in digital currencies, several evidence from the recent past shows that a significant portion of the country's 1.4 billion population are still participating in the crypto market. This is why exchanges such as Binance, FTX, OKX and Huobi are seeing activity in the region. According to FTX's US bankruptcy statements, Chinese customers accounted for 8 per cent of its users, representing approximately 9 million accounts and $11.6 billion in claims by creditors.

Industry experts also suggest that even though the ban has resulted in compliance challenge, some Chinese investors have reported successfully transacting with Binance and OKX. While some of these investors have shared that they have managed to pass the Know Your Customer (KYC) process using Chinese ID, a few others have mentioned their accounts getting frozen.

Jack Ding, from the Duan & Duan Law Firm, which represents six Chinese creditors with $10 million in FTX claims, has noted that crypto trading is outlawed for Chinese citizens at home or abroad, but it is "hard to enforce". Caroline Malcolm, from blockchain analysis company Chainalysis, agrees, adding that bans don't work on decentralized cryptocurrencies, as it is hard for any government to eradicate them as they can be transferred peer-to-peer and traded on global exchanges.

Huobi Global did try to offer Chinese customers the option of a "digital identity" with Dominica, but the firm responded that it has completely exited the Chinese markets and is not allowing Chinese people to sign up. Even though the amount of crypto flowing to China did halve in 2022 from the year before, it was still notably high at $17 billion, hinting at the fact that the ban may not have been effective, or strictly enforced.

If the ban is ever lifted, Caroline Malcolm predicts that this could lead to a "surge in demand for cryptocurrencies" in the Chinese market. It remains to be seen if and when this will happen, but the situation does indicate that despite the ban, crypto investments are still gaining traction among Chinese citizens.



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