China Crypto Investors Are Buying More as Beijing Circles

© Reuters. China Crypto Investors Are Buying More as Beijing Circles

(Bloomberg) -- Some Chinese cryptocurrency holders remain undeterred even after a further crackdown on their industry roiled markets Friday.

Bitcoin was trading around $42,600 as of 12 p.m. on Tuesday in Hong Kong, near the level when the People’s Bank of China on Friday announced its latest step in reining in crypto. China’s central bank banned all crypto transactions, vowed to root out mining of digital assets and closed a loophole that enabled citizens to maintain accounts with offshore exchanges.

The step prompted exchange operators Huobi and Binance to stop letting traders use mainland China mobile numbers to register new accounts. New sign-ups are still available for Hong Kong users on both platforms.

Industry veterans said Beijing’s latest warning could deter new entrants into the crypto scene, but for those who have weathered several crackdowns in the past, it represented another opportunity to buy at lower prices.

“I have bought some when it dipped,” said Bobby Lee, the chief executive officer of crypto wallet firm Ballet Global Inc. The China crackdown hasn’t been as bad as many people thought, so “a dark cloud is removed,” he said.

Other crypto holders in China echoed his sentiments.

“These policies are not new to us, so we view them as a buy signal,” said Stephen, a Shanghai-based crypto investor who preferred to be identified by his first name only. He bought $20,000 of Bitcoin over the weekend, he said, adding that it’s still possible via many centralized and over-the-counter exchanges.

However, he doesn’t see it as likely that everyone will have the same reaction.

“People new to crypto might feel scared. Some of them will quit,” he said.

Another crypto investor who declined to be identified due to the sensitive nature of the topic, also said that the latest crackdown wouldn’t scare off longstanding investors who have found workarounds to buying virtual currencies on official exchanges. Some are turning to MetaMask -- a digital wallet online game players use to buy and sell non-fungible tokens (NFTs), but that can also be used to trade cryptocurrencies, she said.

While Chinese regulators have already banned trading and mining of Bitcoin and other virtual currencies, they are unlikely to implement an outright ban on the holding of digital assets because it would be too difficult to enforce, Stephen predicted.

“The government is smart,” he said. “They won’t issue a policy they cannot implement.”