If you are a foreigners/expats living in China and you are interested in bitcoins (or other cryptocurrencies such as Etherum, Litecoins or Ripple etc.), you might find it a little bit tricky when it comes to buying bitcoins in China.
Bitcoin is Popular in China
Bitcoin has been very popular in China. You might have heard that there are a large number of bitcoin miners in China, and the bitcoin trading volume has been very high in China.
It’s well known that people can make some serious money by trading bitcoins, and the bitcoin price has been rising sharply in the last few months.
Top Bitcoin Exchanges in China
There are some big bitcoin exchanges in China where you can sign up and trade bitcoins. such as OKCoin, Huobi and BTC China etc.
Bitcoin Can Be Used to Get Money out of China
However, there is another reason for people in China buying bitcoins. That’s for cross-border money transfer.
If you have been staying in China for some time, you must know that getting money out of China is quite difficult. There is a USD $50,000 per year limit for anybody in China to send money overseas without government approval. Many people in China want to transfer money out of China for different reasons. And the law makes it very difficult to do so.
Then people discovered bitcoins can be used to bypass this restriction. As many people know, bitcoin is a digital currency that doesn’t belong to any country. There’re many ways to buy bitcoins. Given the right tool (such as a bitcoin wallet), you can transfer bitcoins worldwide between two bitcoin accounts anonymously. Therefore, if you want to transfer a large amount of money out of China, you can buy bitcoins using renminbi (RMB) at a China bitcoin exchange (such as OKCoin) and then transfer the bitcoins to a overseas bitcoin exchange (such as Coinbase) and the sell the bitcoins at the overseas exchange and finally withdraw the cash (such as USD) to your overseas bank account. In this way, you can bypass the USD 50K limit.
Using Bitcoin to Get Money out of China Is No Longer Easy
This method has been working for a while in China, until early 2017, when the Chinese government noticed this “hole” in their system and decided to stop it. As a result, bitcoin exchanges in China were told to temporarily halted bitcoin withdraws. As a result, you can still buy/sell bitcoins using RMB in China and you can still deposit RMB and withdraw RMB, but you can no longer move your bitcoins to another bitcoin account (for example, your bitcoin account at an overseas bitcoin exchange).
So far there has been no news regarding when bitcoin withdraw can be reopened in China’s bitcoin exchanges. Update: In the beginning of June 2017, China’s large bitcoin exchanges started to allow bitcoin withdraw again with some new restrictions on bitcoin withdraw amount.
As you can see, this new regulation can effectively stop people from using bitcoins to get money out of China.
But Is There Another Way to Do It?
As it turned out, there’s another bitcoin trading platform, called LocalBitcoins.com, that facilitates peer-to-peer bitcoin trading between people using different payment methods including bank transfer, Alipay and even cash. Trading bitcoins at LocalBitcoins.com is kind of like exchanging RMB for USD with cash with a guy on the street, where the government’s restriction doesn’t apply, but LocalBitcoins.com is a little bit safer because it provides an escrow service trying to make both parties happy.
As mentioned in the news, many China bitcoin traders have turned to LocalBitcoins as exchanges stop withdraws. If you are interested in buying bitcoins in China and then transfer bitcoins to another account, maybe you can give LocalBitcoins.com a try. Click here to visit LocalBitcoin’s China bitcoin trading page. (It’s website could be blocked in China. If so, you can try using a VPN).