Houbi, the second-largest crypto exchange by trading volume, recently has introduced a 24-hour condition before customers make withdrawals of crypto funds in over-the-counter (OTC) transactions as part of its efforts to discourage speculations.
Based on the new rule, users can only withdraw their virtual coins 24 hours later after buying their tokens; Huobi’s operating unit in China announced the statement on June Friday 2.
The crypto exchange also said that a 36-hour rule might be required in certain cases, describing such cases as a condition whereby customers are potentially at higher risks, as recognised by the company’s risk control system. Some users may be prevented from making withdrawals of their coins for as long as 36 hours if the company’s risk system assesses them to be of high risk.
The announcement is a blow to users relying on Huobi crypto services and crypto investors in China amid the ongoing crackdown on the industry.
The company’s new measurements aim to ensure the safety of customers’ token holdings to avoid losses caused by the inflow of risky funds and protect the safety of users’ funds. The move is part of the firm’s efforts to gradually introduce a series of risk control strategies involving many users.
The company’s latest commitment is part of a precondition of up to 36 hours for crypto withdrawals on certain high-risk users, a measure that Huobi has introduced in August last year.
The new initiative is considered to be effectively connected to China’s ongoing crackdown on crypto investors, which recently targeted cryptocurrency mining and trading, banking services, and online platform payments.
As a result of such restriction, a considerable volume of cryptocurrency trading in the nation has shifted to the OTC market, which is basically unregulated and ensures that the transfer of fiat currencies do not occur directly through exchanges’ trading desks.
It is majorly believed that OTC transactions are being utilised as a gateway for capital outflow and money laundering and to drive speculations that fuel the wild volatility of crypto prices.
China’s Crypto Crackdown
The efforts to impose the 24-hour rule for crypto withdrawals comes a few days after Huobi added China to its list of prohibited jurisdictions on trade derivatives, as the country continues its crackdown on businesses offering cryptocurrency services.
Due to the ongoing crackdown, Users in China have been barred from Huobi’s derivative trading services since last week. As a result, the crypto exchange cut the amount of leverage available to users in the nation to 5 times, down from 125 times previously.
Huobi, which established its crypto business in China in 2013, indicated that it would not offer high risk and leverage products to local users, complying with the country’s crackdown on crypto-assets to avoid financial volatility.
While Bitcoin was trading at around $64,804.72 in April, the leading cryptocurrency lost almost 50% of its value a month later after China requested local banks that they are prohibited from engaging in any cryptocurrency-related activities. It is the latest sign indicating China’s plan to close loopholes in crypto mining and trading.
In May, China’s central bank termed the speculative trading of crypto tokens as risks that would disrupt the normal functioning of the economy and the financial market.
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