Chinese investors paid little attention to the government’s biggest restriction on cryptocurrency trading since 2017, pointing to the challenge for Beijing as it tries to spark a speculative strength in digital assets.
Knee trading precedes the continued recovery of free crypto platforms used by crypto traders from domestic exchanges in 2017. A key measure of local sentiment – the exchange of exchanges between the Chinese yuan and the stablecoin Tether fell as much as 4.4% after a government warning earlier this month but bounced back from half a loss, according to crypto data platform Feixiaohao, a Chinese equivalent of CoinMarketCap.
China has stepped up its crackdown after a sharp surge in Bitcoin and other tokens over the past six months that has raised long -standing Communist Party concerns about potential fraud, money laundering and loss of individual trade. invested. Although the difficult nature of transactions on local OTC platforms and peer-to-peer networks means it will be difficult for authorities to enforce a wholesale ban.
That could be a relief to crypto enthusiasts around the world after concerns about China’s falling purchasing power contributed to nearly $ 1 trillion in sales of digital assets from a record high in the middle. -mid May.
As for losses and setbacks, “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 bought cryptocurrencies since 2017 and claims to have lost $ 11 million in three days of the past recovery. “For me it returns the income I got the last few months,” he said. “I’m looking at 10- to 20 years ahead.”
Before China banned crypto exchanges in 2017, local investors owned an estimated 7% of Bitcoin worldwide and accounted for nearly 80% of sales, according to state media. The exchange ban makes it impossible to measure the numbers now, but Chinese investors continue to be believed to have a major presence in the crypto world through domestic OTC platforms and overseas sites. they access using virtual private networks.
Home transactions involving yuan and digital coins are difficult for the Chinese government to track because they are often done in two separate steps.
The first happened on OTC platforms run by firms including Huobi and OKEx, which allowed traders to post bids and offers. If both sides agree on a price change, the buyer will use a separate payment platform – run by their bank or a fintech company such as Ant Group Co. – to send the yuan to the seller. Digital coins, which are usually held in escrow on the OTC platform until the yuan fee is cleared, are then transferred to the buyer. Chinese regulators often have no way to connect one transaction step to another.
Since the yuan leg of trades took place at the heart of China’s financial system, the risk of large capital inflows is short-lived. But that hasn’t stopped the government from warning financial firms and individual investors to stay away from crypto.
Regulators this month reminded Chinese banks and payment companies of the requirement to identify and block suspicious transactions, and pointed out that speeding up cryptocurrency trading consistently violates banking rules. China’s State Council has called for a crackdown on Bitcoin trading and mining, vowing to be “determined” to avoid financial risks.
Policymakers may seek to avoid any major market turmoil during the politically sensitive 100th anniversary of the ruling Communist Party on July 1st.
Following the government statement, Huobi said it had stopped mining hosting services in mainland China and reinstated futures contracts and exploited investment products in some markets. It is unclear if the firm plans to close the OTC platform.
Immigrants in China have so far stopped labeling individual trafficking illegal, but the move will involve the public security department because some of the activities are suspected of facilitating money laundering and terrorist financing, according to to someone familiar with the matter.
Beijing police are distributing printed warnings about the potential dangers associated with cryptocurrency. Virtual currencies are in vogue for the latest scams, and anyone who is “in a panic, having difficulty identifying or not sure what to do” should call the local police contact listed, according to an announcement seen by Bloomberg.
On social media, some crypto investors have made unconfirmed claims that they were called to the local police recently and warned against the risk of investing in cryptocurrencies. An investor told the local authority to sell his assets. Another said the police asked him to delete the trading app from his phone.
Chinese officials saw their success in cleaning up the peer-to-peer lending industry two years ago as a model for cracking down on its cryptocurrency, the man said familiarly, asking not to be identified as that it is private. The country has cleaned up the P2P industry after widespread scams and atrocities, in some cases leading to suicides and street protests. As a result the sector has more than 50 million users and $ 150 billion in non -loans.
The sharp fluctuation in the price of cryptocurrencies has already left its mark. In a high-profile case, a Chinese man from the eastern town of Dalian killed his three-year-old daughter and attempted suicide with his wife after losing 20 million yuan ($ 3.1 million) in an exploited Bitcoin bet in June, according to local media reports.
Peter, a tech worker in Beijing, deposited 20,000 yuan in cryptocurrencies three weeks ago, just in time for the latest round of scandal. Within days, his portfolio grew to nearly 100,000 yuan, then quickly fell back to 14,000 yuan. He echoes the carpe diem philosophy of crypto traders around the world: “It doesn’t matter if it all goes to zero. But what if it can give me sudden wealth one day?”