Since 2017, Chinese investors have hardly noticed the government’s biggest blow to cryptocurrency trading, which highlights the challenges Beijing faces as it tries to curb speculation in digital assets.

Since the ban on domestic exchanges in 2017, knee-jerk selling has given way to the steady recovery of over-the-counter trading platforms used by Chinese crypto traders. A key indicator of local sentiment-the exchange rate between the Chinese renminbi and the stable currency Tether-according to data from China’s CoinMarketCap cryptocurrency data platform Feixiaohao, its share price has fallen by 4.4% after the government issued a warning earlier this month, but since More than half of the losses have been made up.

In the past six months, the wild surge of Bitcoin and other tokens has exacerbated the Chinese Communist Party’s long-standing concerns about potential fraud, money laundering and transaction losses by individual investors, and China has therefore stepped up its crackdown. However, the untraceable nature of transactions on local OTC platforms and peer-to-peer networks means that it is difficult for the authorities to implement wholesale bans.

After worrying that China’s declining purchasing power caused a record high of nearly $1 trillion in digital assets to sell off in mid-May, this may comfort global crypto enthusiasts.

As for the losses and blows, “I don’t care,” said Charles, a 35-year-old Shanghai real estate consultant who asked for identification only by his English name. He has been buying cryptocurrency since 2017 and claimed to have lost $11 million in three days in the most recent pullback. He said: “For me, this is giving back to my profits over the past few months.” “I am studying the prospects for 10 to 20 years.”

According to official media reports, before China announced a ban on the establishment of cryptocurrency exchanges in 2017, local investors estimated that they owned 7% of the global Bitcoin and accounted for about 80% of global trading volume. The foreign exchange ban makes it impossible to estimate these figures today, but it is still widely believed that Chinese investors through domestic OTC platforms and the offshore venues they visit using virtual private networks occupy an important position in the cryptocurrency world.

It is difficult for the Chinese government to track domestic trade involving the renminbi and digital coins because they usually take place in two steps.

The first was done on OTC platforms operated by companies such as Huobi and OKEx, which allowed traders to post bids and offers. After the two parties agree on the price, the buyer will use a separate payment platform (operated by his bank or a financial technology company such as Ant Group Co.) to remit RMB to the seller. The digital coins are usually escrowed before Bitcoin is cleared before being escrowed on an over-the-counter trading platform (OTC), and then transferred to the buyer. Chinese regulators usually have no way to link one step of a transaction with another.

Since the RMB portion of the transaction is entirely carried out within China’s domestic financial system, the risk of large-scale capital outflows is low. But this has not stopped the government from warning financial companies and individual investors not to use cryptocurrencies.

Regulators this month reminded Bank of China and payment companies to pay attention to the requirements to identify and block suspicious transactions, and pointed out that facilitating cryptocurrency transactions often violates bank rules. The State Council of China called for curbing Bitcoin trading and mining, vowing to “resolutely” prevent financial risks.

Policymakers may wish to avoid any major market disruptions around the politically sensitive anniversary of the 100th anniversary of the ruling Communist Party on July 1.

After the government issued a statement, Huobi stated that it had stopped its miner custody services in mainland China and was reducing futures contracts and leveraged investment products in certain markets. It is not clear whether the company plans to shut down its OTC platform.

A person familiar with the matter said that so far, Chinese regulatory agencies have not illegally flagged personal transactions, but the crackdown will involve public security departments, because some of these activities are suspected of contributing to money laundering and terrorist financing activities.

Beijing police have issued a printed warning about the potential risks of cryptocurrencies. According to a notice seen by Bloomberg, virtual currency is one of the popular methods of the latest scam. Anyone who is “in panic, it is difficult to distinguish or is not sure what to do” should call the listed local police contact.

On social media, some cryptocurrency investors have not been confirmed, claiming that they were recently subpoenaed by local police and warned against investing in cryptocurrencies. An investor said that local authorities asked him to sell his shares. Another said that the police asked him to delete the trading application from his phone.

The person familiar with the matter said that two years ago, Chinese officials believed that their success was cleaning up the peer-to-peer lending industry as a model for their cryptocurrency crackdown. As the matter is private, he declined to be named. Following rampant fraud and breach of contract, the country cleared the P2P industry, in some cases leading to suicides and street protests. In its heyday, the industry had more than 50 million users and $150 billion in outstanding loans.

The extreme price fluctuations of cryptocurrencies have left their mark. In a high-profile case, a Chinese man from the eastern city of Dalian killed his three-year-old daughter after losing 20 million yuan ($3.1 million) in bitcoin through leveraged bets last June. He tried to commit suicide with his wife, according to local media reports.

Peter, a technical worker in Beijing, deposited 20,000 yuan in cryptocurrency three weeks ago, just in time for the latest round of turmoil. Within a few days, his investment portfolio grew to nearly 100,000 yuan, and then quickly fell back to 14,000 yuan. He responded to the clearing philosophy of cryptocurrency traders on a global scale: “It doesn’t matter if everything is zero. But what if one day can bring me sudden wealth?”