- Binance records $90 billion crypto trading by China users, defying regulatory crackdown.
- China-based activity accounts for 20% of Binance’s global trading volume.
- Blockchain data firm suggests China’s crypto ban may be ineffective or loosely enforced.
In defiance of China’s cryptocurrency regulatory crackdown, Binance, the world’s largest crypto exchange, has witnessed an astounding $90 billion in crypto trading by China-based users in May 2023. Remarkably, this activity accounts for a substantial 20% of Binance’s total global trading volume, excluding trades by a small group of large traders.
The staggering figure was revealed through internal data obtained by The Wall Street Journal and confirmed by current and former employees of the exchange. The trading primarily revolved around futures contracts tied to cryptocurrencies, with over 5.6 million registered China-based users, of which 911,650 were actively involved, as reported by Binance’s internal platform, “Mission Control.”
Despite the Chinese government’s crackdown on crypto activities, China remained East Asia’s largest crypto market in terms of transaction turnover and ranked fourth worldwide. “Our data suggests that the ban has either been ineffective or loosely enforced,” said a report by blockchain data firm Chainalysis in 2022.
The greatest challenge that Binance faces today is that we (and every other offshore exchange) have been designated a criminal entity in China.
Binance’s CEO, Changpeng Zhao, has been quick to address the company’s origin and operations. In a blog post, he refuted claims of Binance being a “Chinese company,” stating it has no legal entities in China and operates globally.
The exchange’s presence in China has had a tumultuous history. In 2017, Binance exited Shanghai after facing a series of regulatory attacks from the Chinese government. First, the People’s Bank of China (PBoC) issued a report banning Initial Coin Offerings (ICO) and imposing restrictions on token issuance and financing risks. In 2021, China’s regulatory clampdown on the crypto industry broadened, declaring all cryptocurrency-related transactions as illegal.
Following the ban, a spokesperson from Binance reiterated that the Binance.com website is blocked in China and inaccessible to China-based users. Despite this, China-based clients have reportedly employed various techniques to circumvent the exchange’s know-your-customer (KYC) systems and residency verification, according to leaked internal communications reported by CNBC in March.
Intriguingly, internal company documents seen by the Financial Times raised suspicions regarding Binance’s claims of severing ties with China in 2017. The documents suggest that the crypto exchange maintained substantial links to the country for several years, despite their statements.
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