Chinese Bitcoin traders have inundated LocalBitcoins to convert their Yuan after major Chinese exchanges halted withdrawals last week.
Following warnings about adhering to strict AML/KYC regulations by the People’s Bank of China, exchanges such as BTCC, Huobi and Okcoin stopped letting customers withdraw Bitcoin.
“From now on, Huobi stops the withdrawal for Bitcoin and litecoin,” Huobi’s latest announcement stated Feb. 9. It is unknown when full functionality will return and under what rules.
As a result, former Chinese customers appear to be using LocalBitcoins as a way of continuing to trade. This week saw an all-time high in activity for the site’s China market, with almost 6.6 mln yuan traded according to data from Coin Dance.
By comparison, the previous week showed just 1.4 mln yuan exchanged.
The phenomenon is likely to be temporary given LocalBitcoins rates are less advantageous than those of exchanges. The increased usage also means spreads widen and average prices increase, heightening losses for desperate traders.
As of Monday, the cheapest available price for BTC purchase is still over 7100 yuan.