Chinese traders are having a hard time buying cryptocurrencies on central exchanges and are now turning to alternative options
For Chinese traders and investors of cryptocurrencies, access to the crypto market is almost impossible due to recent regulations. Now they are turning to decentralized exchanges (DEXs) 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 exchange between cryptos themselves are now illegal. This means that the activities of cryptocurrency exchanges in China are now considered illegal.
This recent development has led to crypto exchanges such as Huobi ceasing operations in mainland China. With centralized exchanges no longer an option for Chinese investors and traders, they are now turning to DEXs.
Tokens of decentralized exchanges such as Sushiswap, Uniswap and Pancakeswap have been recovering since the announcement of recent Chinese measures. UNI, the governance token of the Uniswap DEX, is currently the 11th largest cryptocurrency by market capitalization in the world.
UNI has risen by more than 11% in the last 24 hours, surpassing any cryptocurrency in the top 20 by market capitalization. Uniswap is currently the second largest decentralized exchange in the world in terms of trading volume, just behind dYdX.
The head of the research department of Synergia Capital, Denis Vinokourov, pointed out that the recent ban in China will ultimately lead to a massive launch of decentralized exchanges. He told CoinDesk that Maker’s DAI stablecoin will also gain a large market share over Tether (USDT), the world’s leading stablecoin,
The market analyst was very bullish about the prospects of decentralized exchanges over their centralized counterparts. This is not surprising, as more crypto exchanges are expected to announce their withdrawal from China after Huobi takes the first step.
OKEx is another large exchange that still operates in China. However, according to the regulator’s latest decision, the exchange could close all Chinese trading accounts in the coming months.