LocalBitcoins trades have surged in China amid fears of a regulatory crackdown similar to Venezuela.
During the week of Feb. 18th, trading on LocalBitcoins.com, a platform for peer-to-peer localized cryptocurrency trading, has grown exponentially. This increase is from about 6.6 mln yuan the week before to over 36 mln, an almost sixfold increase. This is a particularly noteworthy increase when compared with December’s average of under three mln and rarely over one mln a year ago.
Venezuela, meanwhile, has experienced a growth of LocalBitcoins trading of nearly tenfold over the last year as its citizens attempt to find economic relief in the middle of a crisis.
Fear over People’s Bank of China regulations drove traders underground
Trading activity in China has historically affected the Bitcoin price, and fears that the People’s Bank of China (PBoC) would impose further regulations on exchanges prompted those exchanges to halt withdrawals, which was accompanied by a significant dip in Bitcoin’s price. This, in turn, led droves of traders to LocalBitcoins, seeking to find a safe haven against a potential government crackdown. However, it appears for the time being that those fears have subsided with an announced regulatory alliance with Bitcoin exchanges, causing the Bitcoin price rally to reach new heights.
Peer-to-peer Bitcoin trading is up across the board in restrictive countries
China has not been the only country to see a recent spike in localized Bitcoin trading as a result of governmental policy. Venezuela, a country plagued by an economic crisis including food shortages has also seen a large increase in LocalBitcoins trading this year as citizens attempt to acquire sound money in the midst of a government sting operations.
Earlier this month, the Venezuelan government arrested several Bitcoin miners as part of a continuing crackdown on cryptocurrency users, exchanges and miners. Charges have varied from cybercrime and financing terrorism to stealing electricity. The Venezuelan Bitcoin exchange SurBitcoin also suspended its operations when its bank account was shut down, prompting its owner to encourage Bitcoin trading on LocalBitcoins.