As Beijing attempts to regulate and suppress the cryptocurrency boom, traders have been evading regulatory oversight by using over-the-counter, or OTC trading desks.
According toa May 31 report published by Bloomberg, there has been a significant uptick in OTC platform usage since China announced its latest crackdown earlier this month, with China tightening restrictions prohibiting financial institutions and payment companies from providing services related to cryptocurrencies.
While exact volume data is hard to ascertain as Chinese OTC transactions are peer-to-peer and use third-party payment platforms, the exchange rate between China’s yuan and popular stablecoin Tether (USDT is seen as a key gauge of local crypto market sentiment — with demand for USDT increasing during market downturns.
According to Bloomberg, USDT/CNY fell by as much as 4.4% after the Communist Party crackdown earlier this month but has since recouped more than half the loss. The recovery suggests that peak selling may have passed as the markets begin to consolidate.
One of the concerns