Despite the crackdown on cryptocurrencies in China, traders are still betting Bank News

Chinese investors pay little attention to the government’s biggest crackdown on cryptocurrency trading since 2017, highlighting Beijing’s challenge as it tries to control the growth of speculation in digital assets.

The sale of knee-jerk has paved the way for a steady recovery in Chinese cryptocurrency retailers on over-the-counter platforms they have used since the markets were banned in 2017. A key measure of local sentiment – the exchange rate between the Chinese yuan and the Tether stablecoin -. It fell by as much as 4.4% in the government earlier this month, but has since recovered more than half of its loss, according to the cryptocurrency data platform Feixiaohao, the Chinese equivalent of CoinMarketCap.

China has intensified over the past six months after a huge rise in Bitcoin and other tokens that the long-standing Communist Party has raised concerns about possible fraud by individual investors, money laundering and trade losses. However, the harsh tracing of transactions on local OTC platforms and peer-to-peer networks means that it will be very difficult for the authorities to impose a wholesale ban.

That could be a relief for global cryptocurrency enthusiasts after mid-May worried about the collapse of purchasing power of nearly $ 1 billion worth of digital assets.

As for the losses and crackdowns, “I don’t care,” said Charles, a 35-year-old real estate consultant in Shanghai who asked to be identified only by his English name. He has been buying cryptocurrencies since 2017 and says he lost $ 11 million in three days when he went back in recent days. “For me it’s a return on the profits I’ve made in recent months,” he said. “I’m looking at the horizon for 10 to 20 years.”

Before China outlawed crypto exchanges in 2017, local investors owned 7% of the world’s Bitcoin and accounted for about 80% of trade, according to state media. Exchange bans have now made it impossible to measure these figures, but it is still believed that Chinese investors have a strong presence in the world of cryptography through OTC home platforms and offshore sites that access virtual private networks.

Internal trades that include yuan and digital coins are difficult for the Chinese government to follow, as they usually occur in two different steps.

The first occurs on OTC platforms managed by Huobi and OKEx, which allow traders to post bids and offers. When both parties agree on the price, the buyer will use a separate payment platform — their bank or Ant Group Co. managed by a fintech company like that— to send yuan to the seller. Digital currencies, usually stored on the OTC platform until the yuan payment is cleared, are then handed over to the buyer. Chinese regulators often have no way to link one step of the transaction to another.

Because the yuan leg of business occurs within China’s domestic financial system, the risk of large-scale capital outflows is low. But that hasn’t stopped the government from warning financial companies and private investors to stay away from cryptography.

Regulators have reminded Chinese banks and payment companies this month of the requirement to identify and block suspicious transactions, noting that facilitating cryptocurrency business often violates banking rules. The Chinese Council of State called on Bitcoin to tackle trade and mining by “swearing” that it will avoid financial risks.

Politicians may be keen to avoid major disruptions in the market around the 100th anniversary of the ruling Communist Party on July 1.

After the government statement, Huobi said it was hosting its mining services in mainland China and was reducing future contracts and investment products in some markets. It is unclear whether the company intends to close the OTC platform.

Chinese regulators have so far stopped labeling individual trade illegally, but the crackdown will involve the public security department, as some activities have facilitated money laundering and terrorist financing, according to a person familiar with the matter.

Beijing Police have issued printed warnings about the potential risks associated with cryptocurrencies. Virtual currencies are one of the most popular means of making the latest scams, and people who are “terrified, hard to distinguish or don’t know what to do” should call the listed local police, according to a note seen by Bloomberg.

On social media, some crypto investors have made unconfirmed claims that have recently been called by local police and warned against the risk of investing in cryptocurrencies. One investor said local authorities were asking him to sell his stakes. Another said police asked him to remove the commercial app from his phone.

Chinese officials two years ago saw the peer-to-peer lending industry clean up as a model of cryptocurrency repression, the well-known said, asking not to identify the issue as it is private. The country cleaned up the P2P industry of fraud and after numerous defaults, in some cases leading to suicide and street protests. At the time, the sector had more than 50 million users and $ 150 billion in loans.

The extreme fluctuations in the prices of cryptocurrencies have already left their mark. In a notorious case, a Chinese man in the eastern city of Dalian killed his three-year-old daughter and tried to commit suicide with his wife after losing 20 million yuan ($ 3.1 million) in a Bitcoin betting last June. according to local media.

Peter, a tech worker in Beijing, accumulated 20,000 yuan in cryptocurrencies 20 weeks ago, just in time for the latest volatility. Within a few days, his portfolio reached nearly 100,000 yuan and then reached 14,000 yuan. He echoed the carpe diem philosophy of crypto traders worldwide: “It doesn’t matter if everything goes to zero. But what if one day it brings me sudden wealth? “