Chinese investors are paying little heed to the government’s biggest crackdown on cryptocurrency trading since 2017, underscoring the challenge for Beijing as it tries to rein in a speculative boom in digital assets.
Knee-jerk selling has given way to a steady recovery on over-the-counter platforms that Chinese crypto traders have used since domestic exchanges were banned in 2017. One key gauge of local sentiment — the exchange rate between China’s yuan and the stablecoin Tether — fell as much as 4.4% after the government’s warning earlier this month but has since recouped more than half the loss, according to crypto data platform Feixiaohao, a Chinese equivalent of CoinMarketCap.
China escalated its crackdown after a frenzied surge in Bitcoin and other tokens over the past six months heightened longstanding Communist Party concerns about the potential for fraud, money laundering and trading losses by individual investors. Yet the hard-to-trace nature of transactions on local OTC platforms and peer-to-peer networks means it will be extremely difficult for authorities to enforce a wholesale ban.