China's over-the-counter (OTC) cryptocurrency brokers are experiencing a surge in inflows as investors seek alternatives to weak stock and property markets in a slowing economy. According to a report by Chainalysis, OTC brokers received over $20 billion in each of the first three quarters of 2024, totaling $75.4 billion for the nine-month period. Despite China's ban on digital asset trading, Chinese demand for crypto remains strong. OTC services are popular because they allow investors to exchange yuan for crypto discreetly, without using public exchanges. Chainalysis' data shows that 55% of the value received by OTC brokers came from transactions over $1 million. It is unclear whether these transfers are from wealthy individuals or businesses acting for smaller customers. OTC services are expected to continue growing unless China's regulatory stance on crypto changes. Additionally, cryptocurrencies are being used in cross-border transactions between Russian commodities firms and Chinese clients. China has cracked down on crypto-related crime and strengthened anti-money laundering measures, but enforcement is challenging due to the borderless nature of cryptocurrencies.



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