SHANGHAI — China's latest salvo against cryptocurrencies has driven a brutal selloff in bitcoin markets but retail traders, miners and even crypto finance firms reckon Beijing's bark is louder than its bite.
China's announcement on Tuesday of a tougher ban on banks and payment companies offering crypto-related services furthered a selloff that briefly wiped $1 trillion off crypto market capitalization.
But fears that the rules would cripple cryptocurrency markets and mining on the Chinese mainland appear baseless. Cryptocurrencies could still be bought from China on Thursday and investment schemes promising juicy returns for mining them remained operational.
Bobby Lee, founder and CEO of Ballet, a cryptocurrency wallet app, said he thought the announcement was merely an attempt by regulators to protect retail investors from volatile markets, but that it would be a challenge for banks to identify crypto-related dealings.
"If you look at the banking activity in China, millions or maybe billions of transactions happen on a daily basis. From all that ... how many are actually really crypto services versus dining or e-commerce? It's almost unknowable," said Lee, formerly CEO of BTC China, China's first bitcoin exchange.
It's not the first time China has banned crypto-related financial and payment services. Beijing issued similar bans in 2013, and in 2017, though the latest one has expanded the range of prohibited services. The repeated bans highlight the challenge of closing the loopholes.
On Thursday, Reuters found it was still possible for Chinese individuals to buy bitcoin and other cryptocurrencies and trade them on overseas crypto exchanges such as Binance. Yuan payments for these purchases could be made via banks or commonly-used online payment platforms in over-the-counter (OTC) markets.
"If you have bitcoin or ethereum, and I want to buy some, I can just send money to you through banks. Just don't write down an...