Chinese traders find it difficult to buy cryptocurrencies on centralized exchanges, and they are now looking to alternative options
Chinese cryptocurrency traders and investors are finding it almost impossible to gain access to the crypto market thanks to the latest regulations. Now they are turning to decentralized exchanges (DEX) to buy and sell cryptocurrencies.
Last week, the People’s Bank of China (PBoC) issued a circular stating that companies that allow users to exchange fiat currencies for cryptocurrencies and swap between cryptos themselves are now illegal. This means that cryptocurrency exchange activities are now considered illegal in China.
This latest development has led crypto exchanges such as Huobi to wind down their operations in Mainland China. With centralized trading no longer an option for Chinese investors and traders, they are now turning to DEXs.
The tokens of decentralised exchanges like Sushiswap, Uniswap and Pancakeswap are rallying since China announced its latest measures. UNI, the governance token of Uniswap DEX, is currently the 11th largest cryptocurrency in the world by market cap.
UNI is up by more than 11% over the past 24 hours, outperforming every cryptocurrency amongst the top 20 by market cap. Uniswap is currently the second largest decentralized exchange in the world in terms of trading volume, just behind dYdX.
The head of research at Synergia Capital, Denis Vinokourov, pointed out that the recent ban in China will ultimately lead to the massive adoption of decentralised exchanges. He further told CoinDesk that Maker’s DAI stablecoin would also gain a huge market share against Tether (USDT), the world’s leading stablecoin,
The market analyst was very bullish on the outlook of decentralised exchanges over their centralised counterparts. This is not surprising as more crypto exchanges are expected to announce their exit from China after Huobi takes the first step.
OKEx is another major exchange still operating in China. However, with the regulator’s latest move, the stock market could shut down all Chinese trading accounts in the coming months.
