domains Here’s the ultra-clever way that Chinese are circumventing capital controls with domain names

[WhoaDomain.com]

Chinese aren’t looking to make money. They’re not buying domains as investments– they’re using domains to TRANSPORT money.

Think about it– if you have $50,000 that you really need to get out of China, you can buy an expensive domain today.

Naturally there are no restrictions (for now) on buying a .com domain. So the sale goes through without any problems.

But domains are international. Almost anyone in the world can buy or sell a .com domain.

So later, you travel overseas, open a foreign bank account, then sell your domain to someone else.

The proceeds of that sale get paid to your new bank account abroad. And, presto! You’ve just moved a lot of money overseas, completely circumventing capital controls.

https://www.sovereignman.com/trends...ese-are-circumventing-capital-controls-18521/

 

[Name Trader]

This only works if you buy in Renminbi/Yuan and sell in Dollars, big Dollars. It doesn't work for a $2k 4L.com CHIP domain. Costs would be prohibitive. If you are buying in Dollars and selling in Dollars, you are already free from Government intervention. But if this practice become prevalent, look for the Chinese Government to implement controls on it, because it's legalized money laundering. Also if you buy in Renminbi/Yuan and sell in Renminbi/Yuan, it doesn't work also. Most of the 4L.com CHIP domains are of this type. So I don't believe this is what is driving up prices of 4L.com CHIPS. Greed is what is fundamentally driving up their prices. Where there is greed, there will be bubbles, and bubbles will burst. I just hope we are wise enough to get out before the bubble bursts. When, should be the question. Don't ask me. I have no idea.

 

[Gunjan Maheshwari]

Very well said..

This only works if you buy in Renminbi/Yuan and sell in Dollars, big Dollars. It doesn't work for a $2k 4L.com CHIP domain. Costs would be prohibitive. If you are buying in Dollars and selling in Dollars, you are already free from Government intervention. But if this practice become prevalent, look for the Chinese Government to implement controls on it, because it's legalized money laundering. Also if you buy in Renminbi/Yuan and sell in Renminbi/Yuan, it doesn't work also. Most of the 4L.com CHIP domains are of this type. So I don't believe this is what is driving up prices of 4L.com CHIPS. Greed is what is fundamentally driving up their prices. Where there is greed, there will be bubbles, and bubbles will burst. I just hope we are wise enough to get out before the bubble bursts. When, should be the question. Don't ask me. I have no idea.

 

[Vivi]

This is a very interesting topic you've brought up, @Avtar629 . I liked the points brought up by @stub .

I recently read an article on this topic from the Domain Animal website where he gives a balanced look and careful commentary on the original article you mentioned from Sovereignman. One of the cautionary notes he mentions is that domains are not necessarily very liquid as assets (or at least not if one plans on making an even exchange currency-wise). There is a lot more to the Domain Animal article than that, but I thought I should mention it here: http://www.domainanimal.com/are-capital-controls-behind-chinas-move-into-the-domain-market/

 

[Shams]

Interesting Topic but this reason doesn't make any sense if they have to use the domain to move money.So why they have created chaos of Chips. They simply can buy any good domain and sell it later where they need to move money.As far with chips which also make it limited to chinese buyer.

 

[Raindrops]

Playing off what Stub has laid out, the angle might work better when there is volume involved and a newly created "stock" of sorts.

As an example if you watch Chaomi you will see 6N .nets (with 0,4)sold in bulk lots at about 55 Yuan each - roughly $8.30 USD. 4L non premium.coms.use to be sold in large lots as well at a fairly flat price, excluding the rares that got more attention and their own auction, but now lots are typically 2-3 domains most.

If they acquire bulk rapidly and whittle away availability, wouldn't that in turn create a new commodity where the return would be greater in a shorter period of time with quantity - versus the mild fluctuations of value on quality? And buy sucking up these domains (just as an example), won't that re-create what we have seen with other rapid ascent domains?

I would rather have 500 domains at $10 each that will double in a month by my actions, than 2 domains at $2500 each that might return 15-20% in the same time period.

Don't roast me, I'm an investment amateur and just talking aloud.

 

[Name Trader]

Interesting Topic but this reason doesn't make any sense if they have to use the domain to move money.So why they have created chaos of Chips. They simply can buy any good domain and sell it later where they need to move money.As far with chips which also make it limited to chinese buyer.

Good point. That was on my mind too when I replied. But forgot to include it.

 

[eurorealtor]

Interesting Topic but this reason doesn't make any sense if they have to use the domain to move money.So why they have created chaos of Chips. They simply can buy any good domain and sell it later where they need to move money.As far with chips which also make it limited to chinese buyer.

I agree, otherwise the Chinese buyers would be all over the western popular a/e/i/o short domains as well.
I think short com/net becoming more and more popular for end users in China, since most of their products export around the world and world's companies build business in China.

 

[Name Trader]

[QUOTE="Raindrops, post: 5240729, member: 973031" actions, than 2 domains at $2500 each that might return 15-20% in the same time period. Don't roast me, I'm an investment amateur and just talking aloud.[/QUOTE]

Those numbers don't lie. The issue here is you are making a 100% return in a month on your first example and only a 15-20% return a month on your second example for the same amount of investment. However. This represents different risk profiles. In the first example you buying at reg fee and doubling you money in 1 month. You are at the forefront of a new market, which might or might not materialize. What the Chinese call investing and the West call gambling In the second example, you are in a much more mature established market profile, where all the first investors have made the biggest bucks. Both Chinese & Western styes of investing like returns of (15-20% x 12) 144-240% returns per annum. But these are still at rates of return which are investing for the Chinese and gambling for Westerners.

Anybody in their right minds can see these kind of investment returns will create huge demand, and that demand will overreach at the top end. Then crash. Millionaires will be made in the short term, churning their capital, provided they get out before the crash. The question, as I said above, is when? Looking at the dynamics is not easy. There seems to be a greater pool of demand than supply. Which might indicate there might be some way yet to go before the crash comes. But there are a lot of unknown factors which might come into play. I only wish the best luck for all who play the game

 

[DU]

But if this practice become prevalent, look for the Chinese Government to implement controls on it, because it's legalized money laundering.

How is bypassing Government controls legalized money laundering? Isn't it just illegal money laundering that the government ha been laissez-faire with. It's still smuggling/laundering/illegal.

 

[Name Trader]

@Raindrops - I would add that the elasticity of demand doesn't guarantee you can sell 500 domains for 100% profit 1 month, or even sell 2 domains for 15-20% profit after 1 month. So these numbers are not GUARANTEED. I'm just using your numbers, as gospel, because you have to start somewhere. What do you do with your profits? Re-invest (churn) them again? That involves costs. Why not just hold the ones you already bought?

 

[Name Trader]

How is bypassing Government controls legalized money laundering? Isn't it just illegal money laundering that the government ha been laissez-faire with. It's still smuggling/laundering/illegal.

But the controls are not already in place to prevent this

 

[wot]

This Chinese big money domain laundering process was obvious some time ago.

 

[168]

look for the Chinese Government to implement controls on Domain market
when there is volume involved
Any one care to speculate on what those controls would be?
.com/.net becoming more and more popular for end users and investors in China
Perceived as quality, solid, long and short term. / no trust in Government or stock market,
will create huge demand in China. a greater pool of demand than supply.
2016 another record year. short term trading always takes a hit eventually.
Long term investing won't take a hit and if ya'll believe in .com as much as the chinese do.
Cheers for the year of the .red Monkey

 

[webm]

What stops them using the simpler carrier, Bitcoins, to transport the money instead of such a complex Domain Name System ?

 

[WhoaDomain.com]

Damn! I really started a good conversation huh? lol I just got back and you guys are all talking about this post? NICE!! keep it up. do I get brownie points from NP for this? lol maybe BEER MONEY? lol

 

[WhoaDomain.com]

look for the Chinese Government to implement controls on Domain market
when there is volume involved
Any one care to speculate on what those controls would be?
.com/.net becoming more and more popular for end users and investors in China
Perceived as quality, solid, long and short term. / no trust in Government or stock market,
will create huge demand in China. a greater pool of demand than supply.
2016 another record year. short term trading always takes a hit eventually.
Long term investing won't take a hit and if ya'll believe in .com as much as the chinese do.
Cheers for the year of the .red Monkey

"Someone's real "bullish" on this domain stock market."lol I like that very much. I just spoke to a domain broker in China. not going to mention which company or how I found him. Do your own homework. lol but was devastated to hear the domains I have he said was no market in china and I have 5L.com and 6N.net's.

Now of course I have to take what he took with a grain of salt because. HE IS A BROKER and with ever broker I have ever approached. They always in one way or another end up pooping on your domains "in a nice polite way".

Can you really honestly trust what a broker says? because to brokers they measure Time Vs. Risk Vs. Reward. I understand that.

plus I always end up feeling Brokers are just looking for EASY MONEY. who isn't right? but it's very discouraging when they start on their bs about (in a nice way) that they don't see any value there.

but historical values for similar domains don't lie.
What makes those domains better than mines? One answer I think.

You want to make much? you have to invest much.
Basically with so much inventory in domains you literally have to pay MORE just to get your domains in the eyes of people who "might buy it". You have market it like an animal to get top dollar.

I swear I've seen some ridiculous stupid domains sold for thousands of dollars. maybe I'm just a newbie but that's just very discouraging but I guess only thing to do is keep on moving.

I'm starting to learn slowly in this industry you can't listen to the hype or propaganda or loom and gloom because alot of people have their own agendas in this industry to either sell their domains or protect the value of their domains.

All these spinsters out here peddling snake oil. Hogwash Total Hogwash.

Love to hear anyone's input.

I sure hope 168 is right though.

 

[WhoaDomain.com]

What stops them using the simpler carrier, Bitcoins, to transport the money instead of such a complex Domain Name System ?

because even Bitcoin is going to be regulated eventually plus umm REMEMBER MT. GOX? alot of Chinese lost money back then. MT. GOX was in Japan. pretty close to China. I'm sure they marketed to the Chinese.

 

[WhoaDomain.com]

and bitcoin is Illegal to use china. they can invest in it. BTCC.com exists and it's huge. but use bitcoin to buy milk or clothes? NOT IN CHINA! Want to transfer your Bitcoin using BTCC to say Cayman Islands? BTCC is monitored by China Gov.

 

[WhoaDomain.com]

domain transfers are not = clean laundered Yuan.

 

[WhoaDomain.com]

and Chinese nationalists cannot even connect to Bitcoin exchanges outside of China. kinda like how Google is banned and blocked in China. it's easy enough to block Bitcoin Exchanges. I think?

 

[WhoaDomain.com]

"in a nice way) that they don't see any value there.

I'm quoting myself here. That has to be my favorite quote of 2015!
"I don't see any value there."
Translation? = I don't see any opportunity for me to make $1000-$5000 selling this domain so therefore it's WORTHLESS (To him) as "for sure" I couldn't sell it for $500 and make 50 times my reg fee. Yea it's worthless! Sure buddy. Thanks but no thanks buddy.

Never let a so called "expert" tell you differently. Most of guys just have tunnel vision. and YES they've figured out how to make easy money.

4L.com
4N.com
5L.com
5L.com
6N.com

But that's not THEE ONLY MONEY.

If thee experts knew it all then they would have bought all the 4L.com and 4N.com's before the China Boom and there would be no stories of just regular guys or newbies snagging and selling 4N.com and 4L.com's.

That just shows they are not "all knowing" we're all in the same boat just gambling and "guessing" lol never lost faith.

 

[Name Trader]

@Avtar629 - I wouldn't take it too hard that the broker you approached didn't see any market for your domains in China. And you are almost certainly correct, that selling domains @ $500, is almost certainly of no interest to him. No money it. You need to see it from their perspective. And I think you do. They are probably so busy with so many CHIPs domain sales, that they cannot handle any sales for smaller amounts. It just isn't worth their time or effort.

 

[168]

"Someone's real "bullish" on this domain stock market."lol I like that very much. I just spoke to a domain broker in China. not going to mention which company or how I found him. Do your own homework. lol but was devastated to hear the domains I have he said was no market in china and I have 5L.com and 6N.net's.

Now of course I have to take what he took with a grain of salt because. HE IS A BROKER and with ever broker I have ever approached. They always in one way or another end up pooping on your domains "in a nice polite way".

Can you really honestly trust what a broker says? because to brokers they measure Time Vs. Risk Vs. Reward. I understand that.

plus I always end up feeling Brokers are just looking for EASY MONEY. who isn't right? but it's very discouraging when they start on their bs about (in a nice way) that they don't see any value there.

but historical values for similar domains don't lie.
What makes those domains better than mines? One answer I think.

You want to make much? you have to invest much.
Basically with so much inventory in domains you literally have to pay MORE just to get your domains in the eyes of people who "might buy it". You have market it like an animal to get top dollar.

I swear I've seen some ridiculous stupid domains sold for thousands of dollars. maybe I'm just a newbie but that's just very discouraging but I guess only thing to do is keep on moving.

I'm starting to learn slowly in this industry you can't listen to the hype or propaganda or loom and gloom because alot of people have their own agendas in this industry to either sell their domains or protect the value of their domains.

All these spinsters out here peddling snake oil. Hogwash Total Hogwash.

Love to hear anyone's input.

I sure hope 168 is right though.

Just in from NamesCon Las Vegas,
I spoke with several "Investors" from China and India.
It is true the top brokers are no different than the top brokers in America. You would most likely get the same answer from American, Euro and India top brokers.What I found hilarious was an India broker only interested in top tier .com buying new tld's at the auction! I called him on it lol. A case of observe what they do and not what they say. The market availability on the high end is strong so why bother with 2nd and 3rd tier properties ? The lower end properties are doing well at auctions. Forget about the brokers until the inventory is depleted. All global markets require a constant flow of Inventory. The GoDaddy buyout is a great example. The China platforms need Inventory period.
My perspective is this - When the cream is absorbed there will still be demand. 2nd and 3rd tier sales will improve just not at the level of the cream. The investors follow the path of the "early" .com investors.
Buy and hold long term. It is also how the culture invests. The high end will see some flipping however the majority of the investors are buying to hold which will create yet another perceived inventory shortage and urgency to stay ahead of government controls in a market that is easily twice the size of America and Europe combined. It's not likely the government could get away with the banning of .com .net purchases from or in China.I won't express what they could do to curtail sales from China. Whatever the government may do to curtail the volume of money moving out of China thru Domains would most likely increase demand and foreign holding companies so they would most likely have to make other investments more attractive in China which they have yet to succeed in creating. Trust in government policy has always been a factor for the Chinese citizen. The lack of trust isn't going away anytime soon. I have also heard from a former government source, the government is doing their best to cooperate on many levels which is a very good indicator for the future market. Bullish ? Short term YES!

 

[WhoaDomain.com]

Just in from NamesCon Las Vegas,
I spoke with several "Investors" from China and India.
It is true the top brokers are no different than the top brokers in America. You would most likely get the same answer from American, Euro and India top brokers.What I found hilarious was an India broker only interested in top tier .com buying new tld's at the auction! I called him on it lol. A case of observe what they do and not what they say. The market availability on the high end is strong so why bother with 2nd and 3rd tier properties ? The lower end properties are doing well at auctions. Forget about the brokers until the inventory is depleted. All global markets require a constant flow of Inventory. The GoDaddy buyout is a great example. The China platforms need Inventory period.
My perspective is this - When the cream is absorbed there will still be demand. 2nd and 3rd tier sales will improve just not at the level of the cream. The investors follow the path of the "early" .com investors.
Buy and hold long term. It is also how the culture invests. The high end will see some flipping however the majority of the investors are buying to hold which will create yet another perceived inventory shortage and urgency to stay ahead of government controls in a market that is easily twice the size of America and Europe combined. It's not likely the government could get away with the banning of .com .net purchases from or in China.I won't express what they could do to curtail sales from China. Whatever the government may do to curtail the volume of money moving out of China thru Domains would most likely increase demand and foreign holding companies so they would most likely have to make other investments more attractive in China which they have yet to succeed in creating. Trust in government policy has always been a factor for the Chinese citizen. The lack of trust isn't going away anytime soon. I have also heard from a former government source, the government is doing their best to cooperate on many levels which is a very good indicator for the future market. Bullish ? Short term YES!

Awesome POST! Thanks!