China's crypto investors unfazed by crackdown

BEIJING • Some Chinese cryptocurrency holders remain undeterred even after a further crackdown on their industry roiled markets last Friday.

Bitcoin was trading around US$42,600 as at noon yesterday in Hong Kong, near the level when the People's Bank of China last 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. However, 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 bought some when it dipped," said Mr Bobby Lee, CEO of crypto wallet firm Ballet Global. The China crackdown has not been as bad as many people thought, so "a dark cloud is removed", he added.

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 only by his first name. He bought US$20,000 (S$27,100) of Bitcoin over the weekend, he said, adding that it is still possible via many centralised and over-the-counter exchanges.

But he does not 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 the latest crackdown would not 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 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."

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A version of this article appeared in the print edition of The Straits Times on September 29, 2021, with the headline 'China's crypto investors unfazed by crackdown'. Subscribe