Despite China’s cryptocurrency ban in 2021, Binance, the world’s leading crypto exchange, has managed to maintain a significant presence in the country. In just one month, the exchange saw $90 billion worth of cryptocurrency-related assets traded by Chinese users, making China Binance’s largest market, accounting for 20% of its global volume. This is in spite of the exchange’s website being officially blocked in China.
Binance has cleverly sidestepped these restrictions. Users in China are directed to different websites with Chinese domain names, which then reroute them to the global exchange. As a result, Binance continues to support more than 900,000 active users in China.
The company’s ability to operate in this manner is pivotal for its survival as it faces global regulatory challenges, including lawsuits and ongoing investigations by the U.S. Securities and Exchange Commission.
Binance’s founder, Changpeng Zhao, has expressed the difficulties of operating within China’s legal landscape, stating that offshore exchanges have been designated as criminal entities. Despite this, China remains the fourth-largest market for crypto trading, according to Chainalysis, a crypto research company.
The popularity of cryptocurrency in China has even prompted another exchange, Huobi, to offer Chinese users “digital citizenship” in Dominica to allow them to trade on the platform.
Despite the ban, Binance’s trading volume in China rebounded in 2022, with China-based customers trading over $90 billion in cryptocurrencies in May 2023, primarily in futures contracts tied to cryptocurrencies.
This continued operation, albeit covert, highlights the resilience of cryptocurrency exchanges amid stringent regulations.
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