A Guide To Investing In Bitcoin From China

Despite China's ban on cryptocurrency, there are still ways for Chinese citizens to invest in Bitcoin. In this article, we will explore the different methods available to Chinese investors, the risks involved, and the steps one needs to take to start investing in Bitcoin from China. We will also discuss the regulatory landscape surrounding cryptocurrency in China and how it affects investors.

Using a crypto exchange

Here's a step-by-step guide on how to use a crypto exchange to invest in Bitcoin from China:

• Choose a Crypto Exchange: Select a crypto exchange that is accessible in China, such as Binance, Kraken, Coinbase, or OKX. These platforms may require the use of a Virtual Private Network (VPN) to access, as they are often blocked by the Chinese government.
• Create an Account: Sign up for an account on your chosen crypto exchange. You may need to provide personal information and verify your identity with a photo ID. Some exchanges may also require you to set up a crypto wallet to store your Bitcoin.
• Deposit Funds: Fund your account by transferring money from your bank account, credit or debit card, or another payment method accepted by the exchange. Chinese residents often use bank cards, Alipay, WeChat Pay, or overseas bank accounts for this step.
• Buy Bitcoin: Once your account is funded, search for Bitcoin (BTC) on the exchange and place a buy order. Specify the amount of Bitcoin you want to purchase, review the price and any associated fees, and confirm the transaction.
• Store Your Bitcoin: Decide whether to leave your Bitcoin on the exchange or withdraw it to a personal crypto wallet for added security. MetaMask and Trust Wallet are popular choices for crypto wallets.

It's important to note that buying Bitcoin through a crypto exchange in China comes with risks. The Chinese government has imposed strict regulations and bans on cryptocurrency trading and transactions. There may be penalties for those who violate these rules, and the use of a VPN to access blocked exchanges carries its own risks. Be sure to stay informed about the latest regulations and understand the potential consequences before proceeding.

Opening an overseas bank account

• Choose your destination: Select the country where you want to open the account. This could be based on factors such as the availability of banking services, tax treatment, or personal preferences.
• Check your eligibility: Different banks and countries will have their own requirements for opening an overseas account. For example, HSBC requires applicants to be at least 18 years old and have a valid reason for opening an account overseas.
• Gather the necessary documents: You will typically need to provide proof of identity, such as a passport, driver's license, or national ID card. Additionally, you may need to provide proof of address, employment, income, and tax details.
• Start the application process: Contact your chosen bank to initiate the application process. They will guide you through the specific steps, which may include applying online, through an international banking centre, or in a branch.
• Provide additional documentation: Depending on the nature of your transactions and the requirements of the bank, you may need to provide further documentation. This could include information on the source of your deposits, such as wage slips, investment information, or letters from insurance companies.
• Complete the account opening: Once you have submitted all the required documentation and met the eligibility criteria, your account opening process will be completed. This typically takes around two weeks, but it may vary depending on the bank and location.

It is important to note that while opening an overseas bank account can provide benefits such as easier financial management when living or working abroad, there may also be tax implications. For example, U.S. citizens with foreign bank accounts totaling more than $10,000 must declare them to the IRS and the U.S. Treasury.

Using a P2P marketplace

To get started with P2P trading, you will first need to sign up on a website or app and create an account. It is highly recommended that you have your own crypto wallet before you begin. You can then create your own virtual trading shop, listing your chosen payment methods, prices, and other terms.

There are several P2P platforms available, each with its own unique features. For example, Paxful allows users to buy and sell Bitcoin instantly with over 300 payment methods, including bank transfers, gift cards, PayPal, and Western Union. LocalCoinSwap is another popular non-custodial P2P cryptocurrency marketplace that enables users to buy, sell, and trade various cryptocurrencies with other traders worldwide. LocalCoinSwap offers escrow protection and high liquidity, allowing users to trade with flexibility and control.

Other notable P2P platforms include BingX, 1inch Network, WazirX, SecureShift, KuCoin, OKX, Mycelium Wallet, Remitano, Bybit, Giottus, TimeX, CoinCola, Bisq, SimpleSwap, Bitquick, Bitfada, Swapika, Zapit, Hodl Hodl, AltMarket, and Binance P2P.

Using an OTC desk

Over-the-counter (OTC) desks facilitate direct trades between two parties without revealing information about the trade to the public via an exchange order book or otherwise. OTC desks are useful for large-volume transactions, allowing buyers and sellers to agree on a purchase price before completing the transaction.

OTC desks are especially useful for crypto investors in China, where crypto trading and mining have been banned since 2021. Chinese residents can no longer legally trade cryptos or use crypto exchanges, but they can still hold crypto and liquidate their assets using OTC desks.

OTC desks differ from traditional exchanges in terms of transaction transparency. Transactions on traditional exchanges are executed via an order book for everyone to see, whereas OTC trading is relatively opaque. Crypto OTC desks enable large investors to buy and sell substantial amounts of cryptocurrency without alerting the market about their intentions or transactions.

There are two types of OTC desks: principal and agency. Principal desks assume the risk to the buyer by using their funds to purchase whatever asset the buyer requires. Agency desks, on the other hand, don't assume market risk since they don't put up their own money for transactions. Instead, they act as intermediaries to broker a deal on behalf of the buyer and charge a brokerage fee for this service.

When using an OTC desk, it's important to consider the risks involved, such as counterparty risk, regulatory risk, scams, and platform risk. It's also essential to choose a reputable and secure OTC desk that employs measures like cold storage and insurance to protect client assets.

Travelling to Hong Kong

If you are travelling to Hong Kong from China, there are a few things you should keep in mind. Firstly, Hong Kong has its own set of immigration regulations, separate from mainland China. If you plan to stay in Hong Kong for less than 90 days, you generally won't need a tourist visa. However, if you intend to stay longer, you must obtain a visa from the Hong Kong Immigration Department or the nearest Chinese mission with visa-issuing facilities.

When travelling to Hong Kong, make sure your passport is valid for at least one month after your planned departure date. It is also important to be aware of the restricted items that cannot be brought into Hong Kong, such as objects with sharp points or edges and martial arts equipment. Additionally, electronic cigarettes and other smoking products are prohibited.

In terms of health and safety, Hong Kong experiences typhoons and heavy rainfall, so it is important to monitor weather forecasts and follow local authority advice during such events. The region also has very high humidity during the summer months, from May to October, which can affect individuals with heart or breathing conditions. It is recommended to reduce physical exertion and outdoor activities during this period.

Hong Kong has strict laws on national security, and it is advised to exercise a high degree of caution. Avoid public demonstrations and large gatherings, as authorities may arrest protesters. Drink spiking is also a concern, so never leave your food or drinks unattended and be cautious when accepting anything from strangers.

Frequently asked questions