China to block centralized trading of cryptocurrency

Business

Chinese authorities plan to block domestic access to Chinese and offshore cryptocurrency platforms that allow centralized trading, Bloomberg reported Monday citing sources.

 

Chinese authorities will also target individuals and companies that provide market-making, settlement and clearing services for centralized trading, Bloomberg reported.

Last year, Chinese regulators banned initial coin offerings, shut down local cryptocurrency trading exchanges and limited bitcoin mining – but activity in the cryptocurrency and bitcoin space has continued through alternative channels in China despite the crackdown.

 

Chinese government plans indicate that any form of centralized trading platform is about to be put under intense scrutiny. Residents will be blocked from accessing domestic and foreign methods that allow for cryptocurrency to be traded in any central location. There is no indication how Chinese authorities plan to restrict access to decentralized currencies.

One upcoming improvement to protocols related to blockchains that could make trade regulation extremely difficult is the introduction of atomic swapping. An atomic swap is a direct conversion between two currencies or crypto tokens without the need for a third-party. A piece of shared blockchain is modified to switch out one coin for another, effectively making trades possible without a peer to fill a buy order.

 

Trading currencies between peers is relatively easy and fast. It can take just a few seconds to transfer newer and more efficient coins. Although Bitcoin is most well-known, the blockchain it runs on has grown to tremendous size and its network has not scaled to remain a cheap and quick way to transfer value. It currently can cost upwards of $5 to send a small Bitcoin transaction within minutes instead of the seconds it would take using Litecoin, Ethereum or any other coin with a less congested network.

Even though it may be considered illegal for Chinese citizens to engage in cryptocurrency exchanges, individual peer-to-peer transactions will not be a primary target for regulators. Given the somewhat anonymous nature of cryptocurrencies, it is unclear whether it would even be possible for regulators to go after individuals for small transactions. Monero is a cryptocurrency that is designed specifically to prevent regulators or anyone else from tracking the flow of value.

 

 

https://www.techspot.com/news/72753-china-block-centralized-trading-cryptocurrency.html