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China Bitcoin OTC Report of Nov:21 Platforms Listed 16 Coins

Exchange of Bitcoin and fiat currencies consists an important link in the cryptocurrency chain of ecology. In general, it can be divided into exchange trading and over the counter trading(OTC). Bitcoin over-the-counter transactions occur earlier than exchange transactions, principally one-on-one transactions by both parties through private negotiations. Recently, hotpot issues keep flaring up in bitcoin ecosphere, trading prices hit record highs one after another and the over-the-counter transactions have been developing rapidly. A series of new situations are worthy of attention. The National Internet Financial Risk Analysis Technology Platform monitored the recent bitcoin OTC transactions and formed the current report.

1. Accelerated growth of exchange platforms

It’s found through monitoring that the Bitcoin OTC platform has been accelerating listing since October. As of November 25, C2C over-the-counter trading platforms supporting bitcoin against the yuan (BTC-CNY) has reached 21, listing time was concentrated from late October to November. Prior to October, four major platforms were active: LocalBitcoins, BitcoinWorld, Paxful and Coincola. Starting from late October, OTC789, OKOTC, OTCBTC and other platforms have been on the line, OKEX launched OTC functions. In November, coins001, OTCOIN, ZB.com, huobi.pro and other platforms launched one after another the C2C OTC function.

C2C OTC platform provides a place for Bitcoin buyers and sellers to disseminate information of purchase and sale. Similar to “Taobao” mode, after the buyer “photographed” a certain amount of bitcoins, the platform will have the buyer’s bitcoin account locked. According to the agreed payment method, the buyer pays the seller RMB and confirms the payment is completed. After receiving the payment in RMB, the buyer confirms the transaction was successful and the platform automatically releases the locked bitcoin to the seller. The platform serves as an intermediary to charge a certain percentage of each transaction for the transaction to be successful. From the perspective of the website servers’ location, the platforms are mainly located in Hong Kong, the United States, Japan and other places.

2. Increasingly rich business contents

According to the business contents of the platform, we can divide the C2C OTC trading platform into three business models, as shown in Figure 1.
First, C2C OTC-specific trading model, such platforms only operate C2C OTC business. There’re a total of 15 such platforms.

The second is the “wallet APP + OTC” model. Through such additional modules as instant messaging, such platforms integrate OTC functions into the Bitcoin wallet APP. There’re two such platforms.

Third, the “exchange + OTC” business model, that is, running both exchange transactions and BTC/ RMB OTC transactions, a total of four platforms do this. It is noteworthy that some of these platforms have, to some extent, bridged a virtual currency transfer channel between the exchanges and OTC accounts. Which realized in some way disguised BTC/RMB exchange transactions.

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Figure 1 C2C OTC trading business model classification

3. Increasingly diversified cryptocurrencies
In addition to Bitcoin, Ethereum and Bitcoin cash, many other currencies have also been launched on the platforms aforementioned for P2P RMB exchange transactions. According to statistics, a total of 21 platforms has listed 16 kinds of cryptocurrencies. Among them, there are 12 supporting Ethereum, 10 supporting Bitcoin cash and 8 supporting Litecoin. The specific distribution is shown in Figure 2.

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Figure 2 Transactions of different cryptocurrencies on C2C platforms

It is noteworthy that USDT, CK.USD and QC in Figure 2 are the kind of “cryptocurrencies” (USDT and CK.USD can be exchanged with USD 1: 1 or exchanged with the RMB on the USD/RMB exchange rate, QC can be exchanged with the RMB 1: 1) that have a fixed exchange rate with fiat currencies such as RMB, USD and the likes. It adopts a decentralized distribution approach and is different in nature from bitcoin and other cryptocurrencies. Besides, ZB.com supports QC and USDT to exchange with RMB at fixed rate. OTC789.com supports CK.USD exchanges at fixed exchange rate with RMB, and huobi.pro supports C2C exchange between USDT and RMB.

Recent monitoring data showed an increase in the issuance of the cryptocurrencies exchanged with RMB on a fixed rate. In addition to the three currencies above, CNYT, QQC, etc. can also be exchanged with the RMB on 1: 1 basis.

4. Payment method analysis

Looking at the payment method used for BTC-CNY OTC transactions, a sample monitoring in November 2017 found that 49% of the selling ads chose Alipay as the payment channel, followed by bank transfer, accounting for 36%. In CoinCola’s trading ads, sample monitoring found that 81% of them were paid by Alipay, followed by bank transfer, accounting for 14% of the total; Among the BTC-CNY over-the-counter transactions completed through Paxful, 99% of the transaction orders were completed through Alipay on RMB transfer.

5. Transaction size trend

Since 2017, the trend of BTC-CNY OTC transaction size is shown in the chart below (Note: trading data of two platforms are adopted: LocalBitcoin and Paxful). Before February, BTC-CNY OTC turnover was relatively small. With the major domestic Bitcoin trading platform banning withdrawals in early February, the size of the transactions saw an exploding growth. Since June 2017, when the major domestic trading platform has opened up withdrawals, the transaction size has obviously decreased. With the liquidation of domestic ICO and Bitcoin transactions in early September, over-the-counter trading has boomed again.

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Figrue3 BTC-CNY OTC daily transaction volume

6. Conclusion

With the deepening development of bitcoin, OTC trading has been increasingly active. New platforms and cryptocurrency types have been put on the market continuously. Trading and business models have become more and more diversified and have a closer and more complicated relationship with exchange transactions. National Internet financial risk analysis technology platform will continue to monitor.

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