The People’s Bank of China issued a notice on September 24, announcing that cryptocurrency does not have the same legal status as legal tender, and that cryptocurrency-related businesses are deemed illegal. After the news was released, the cryptocurrency market fluctuated, and Bitcoin plunged 6% to 41089.46 US dollars.
Subsequently, China’s large cryptocurrency exchange Huobi said on the 26th that it will stop the registration requirements for new users in China and close its Chinese accounts before December 31 this year. Binance, a major cryptocurrency exchange, also suspended new accounts in China.
Despite this, the cryptocurrency market did not appear to collapse. Bitcoin stabilized after falling to around US$41,000 and fluctuated in the range of US$41,000 to US$44,000. Why did the cryptocurrency ban not have a significant impact on the market?
Investors move to DEX transactions with higher privacy and anonymity
According to Investing.com data, although major cryptocurrencies such as Bitcoin and Ethereum plummeted after the announcement of the ban, their prices immediately rebounded back to their original prices. The decentralized exchange (DEX) tokens (such as Uniswap and Sushiswap) rose by about 26% and 11% respectively between the 24th and the 29th. In addition, dYdX, which is also a DEX token, soared by about 80%, with a 24-hour trading volume of 3.68 billion U.S. dollars, surpassing its old owner Coinbase.
Chinese cryptocurrency did not cause the cryptocurrency market to plummet, and it also allowed DEX tokens to rise. Foreign media Barron’s speculated that the reason may be that investors switched to DEX trading.
The privacy and anonymity of DEX far exceeds that of ordinary exchanges. Users can create an account without providing their name and address. They only need to register a digital wallet related to the IP location and security key, and use codes and smart contracts to trade. Make it difficult for regulators to track. If investors move to DEX trading for a long time, Uniswap, Sushiswap, and dYdX will be the beneficiaries.