How To Buy Bitcoin In China
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Buying Bitcoin in China is hindered by a regulatory ban imposed on cryptocurrency in September 2021. Chinese residents can no longer mine or trade cryptos legally. The country banned crypto exchanges, and banks were instructed to report crypto transactions.
This article explores potential options to buy Bitcoin in China, the payment options available, and much more.
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China banned crypto exchanges and trading in 2017 and late 2021. This effectively locked out Chinese residents from purchasing Bitcoin, even on overseas exchanges.
There are P2P marketplaces and OTC desks that Chinese mainland residents can use to buy Bitcoin.
Alipay, WeChat Pay, and Bank transfers are the payment options available to Bitcoin buyers.
Guidelines for buying Bitcoin on P2P platforms are pretty straightforward. On Paxful, Chinese buyers don't have to verify their IDs.
Beginners need to consider several factors such as volatility, security, and fees before investing in Bitcoin.
What Options Do I Have When Buying Bitcoin in China?
Since the ban on crypto activities in China, most platforms have started to delist Chinese citizens. Following the ban, major crypto exchange platforms like Binance and OKEx exited the market.
However, holding crypto in China is not prohibited. Many citizens continue to hold onto their crypto assets. Users can liquidate these assets when they use OTC desks, P2P marketplaces, or travel to Hong Kong.
Let's look at some of the platforms available for Chinese citizens to circumvent the crypto ban laws. Then, we'll check what their global counterparts in countries like the UK and USA use to buy Bitcoin.
Peer to Peer Marketplaces (P2P):
These noncustodial platforms connect Bitcoin buyers to sellers. Sellers can create adverts to specify the number of Bitcoins they have, the payment method they accept, and prices.
Buyers can browse offers available using various criteria such as location and price. Like sellers, Bitcoin buyers can also set up adverts with their preferences. Opening accounts on these platforms are relatively easy.
A majority of P2P marketplaces provide escrow services to prevent scamming. To get the best Bitcoin seller filter using the following criteria:
Seller feedback score
Seller trust level
Over-the-counter cryptocurrency desks operate on a peer-to-peer basis facilitating the buying and selling of Bitcoin without the need for an exchange service. Major exchanges like Huobi used to offer this service until late September when the ban was announced.
However, some small-time OTC desks are still operating out of China, as evidenced by the number of CNY/USDT transactions observed on the blockchain explorer. The advantage of these desks is that it becomes hard to trace transactions because they happen in two parts.
Decentralized Exchanges (DEXs):
These are noncustodial platforms that facilitate peer-to-peer trading. No intermediary oversees transactions; instead, smart contracts match transactions automatically.
Immediately after custodial exchanges pulled out of China, there was a significant rise in users registering and using DEXs. Due to their decentralized nature, most of these platforms don't require KYC details; therefore, it becomes tough for the Chinese government to track users.
Leading DEXs platforms are believed to have received customers from China including dYdX and Uniswap.
These platforms were kicked out of mainland China following a ban in the last quarter of 2021. Binance and OKEx are examples of major services that halted their operations.
Those still interested in buying Bitcoin from the Chinese mainland can travel to Hong Kong, where platforms like Paybis and Coinbase operate legally.
Pros and Cons of Using Bitcoin
How to Buy Bitcoin in China?
P2P marketplaces provide the best avenue to purchase Bitcoin in China at the moment. Please take note to conduct inexpensive purchases to avoid regulatory scrutiny.
This section will focus on the step-by-step guideline for acquiring Bitcoin on Paxful.
Step 1: Visit the official Paxful website and create an account
Step 2: Find a suitable vendor
Step 3: Check the requirements
Step 4: Start the trade
Step 5: Execute the trade
Where to Buy Bitcoin In China?
Unlike other major economies, there are limited options for purchasing Bitcoin in China. We'll review some of the leading P2P platforms you can use and compare that to some of the top exchange platforms globally.
Paxful is a renowned P2P crypto marketplace present in more than 180 countries. You can easily buy and sell Bitcoin with various payment options such as Wechat Pay.
A variety of payment options
Good filter options
LocalBitcoins is another P2P marketplace that offers a noncustodial form of crypto purchases. The marketplace has a presence in China, and buyers can purchase Bitcoin easily.
Wide range of payment methods
Android and IOS mobile app
ProsAlipay, Wechat, and bank transfers are availableTransaction managementReputableEasy to useQuick sell and buyReporting and analysis tools available
ConsLimited variety of crypto
Paxful vs LocalBitcoins:
These two platforms have a lot of similarities, with a presence across most countries globally. They are both noncustodial platforms offering a limited number of cryptos. Both offer P2P marketplaces with escrow services.
However, LocalBitcoins offers a couple more features in terms of reporting, transaction monitoring, and Alipay as a funding option.
Although not available in China, Coinbase is a global crypto exchange in more than 100 nations. Buyers can purchase Bitcoin in exchange for fiat currency such as USD and EUR.
Intuitive user interface
Web and mobile apps
Paybis is a crypto exchange that covers over 180 countries globally. The platform presents an easy-to-use interface where you can purchase Bitcoin easily.
24/7 customer support
Available in 180+ countries
Coinbase and Paybis:
Although unavailable in China, both platforms are global exchanges with beginner-friendly interfaces. Customers in the UK, USA, and Europe enjoy services from both platforms.
Coinbase has more registered users and a higher number of cryptocurrencies. Paybis wins the battle of fees, offering between 1%-8.9% fees depending on the mode of payment.
What Are the Regulations and Taxes When Buying Bitcoin in China?
Government laws and regulations have altered the Chinese crypto landscape completely. Crypto mining, exchanges, and buying crypto from overseas is banned.
Additionally, financial institutions are banned from offering services to crypto exchanges and are tasked with preventing crypto transactions through their systems.
Due to the ban in China, there is no set of laws on taxation concerning profits from crypto sales.
Other Considerations When Buying Bitcoin in China
Some P2P marketplaces have exempted Chinese residents from ID verification. This is important to ensure that the anonymity of the buyer is maintained.
Local and global exchanges are banned in China. It is also illegal to trade cryptocurrencies. This is due to the speculative nature of crypto and the government's intention to introduce its own digital currency.
You Can't Reverse Transactions:
You should note that Bitcoin transactions are not reversible. Ensure to input the correct wallet address when transferring your crypto assets to your external wallet.
2FA, strong passwords, never sharing your private keys, and cold wallets are some of the ways you can personally protect your Bitcoin. Select a reputable crypto platform that guarantees security for your funds, assets, and personal data.
The volatility of Bitcoin is well documented. Prices often fluctuate significantly. Investors must have a firm grip of market fundamentals before investing.
Deposit and withdrawal fees are avoided when using P2P platforms in China. However, some platforms charge escrow, transaction, and payment processing fees. However, most P2P marketplaces take advantage of the sheer number of users and charge minimal fees.
Crypto exchanges and the use of overseas exchanges are banned in China. Residents have to use P2P marketplaces to sidestep the government regulations.
What Payment Methods Can I Use to Buy Bitcoin in China?
There are two main methods you can use to fund crypto purchases in China. We discuss them in detail below:
Digital Payment Wallets:
Many Bitcoin vendors on P2P platforms like Paxful and LocalBitcoins accept Alipay and WeChat Pay. These are easy to use because you can send money instantly to the buyer.
Bank transfer is another option provided by P2P marketplaces in China. You can perform an account-to-account transfer to complete your Bitcoin purchase.
How to Store Coins?
Storage of crypto is critical whether you are a long or short-term investor. Although P2P platforms and exchanges offer crypto wallets, we recommend moving your Bitcoin away to a secure external wallet. Bitcoin wallets come in two categories; see below.
These are digital wallets that are accessible online. Some function through the web, while others are downloadable for mobile and desktop. Examples of reputable wallets are Exodus and Bitcoin wallet.
Note that hot wallets are not 100% secure due to being online. We recommend cold storage for those investing large amounts.
Cold wallets are small USB-like devices that operate offline. These will cost you some cash, unlike some hot wallets. Hackers are unlikely to tamper with your cold wallet as long as you don't share your private keys. Some of the leading cold Bitcoin wallets are Ledger and Trezor.
The Chinese government's ban on crypto makes it difficult to purchase Bitcoin. Buyers can no longer use exchanges such as Huobi and OKEx.
However, it is possible to buy Bitcoin using P2P marketplaces or OTC crypto desks. Users should note that this is still illegal. LocalBitcoins and Paxful are available to Chinese investors. We recommend using Paxful to buy Bitcoin in China. Users can use the filter option on these platforms to customize their preferences.