China’s bitcoin exchanges are closed to local customers, and a “comprehensive ban” is reportedly in the works. In the meantime, China’s bitcoin traders are heading for the peer-to-peer marketplace LocalBitcoins to exchange fiat and crypto. The trade volume on LocalBitcoins has surged in recent days.
LocalBitcoins is a website that allows buyers and sellers to deal with one another directly. It’s a decentralized network of traders rather than a centralized marketplace or exchange. That’s why it’s a popular option when official restrictions on crypto trading are put in place, or in markets without established exchanges, like India and Venezuela. Yuan-bitcoin volume on LocalBitcoins has tripled since August.
The yuan trade on LocalBitcoins first spiked in February, when the Chinese government began conducting inspections of local exchanges. The platforms halted withdrawals during that time, leading to a spike on LocalBitcoins as traders sought ways to cash out their bitcoin holdings.
Luckily for traders looking to exchange, the price of bitcoin has rebounded spectacularly over the last week, gaining 33% since it hit a low of $3,000 on Sept. 15. It’s now trading just 15% below its price when officials began cracking down on bitcoin early in the month. It’s also up fourfold for the year.
Trading on LocalBitcoins comes at a cost. The prices offered to sell bitcoins on the marketplace are about 20% higher than the prices offered on the major Chinese exchanges, which are still able to operate for several more weeks.
