Cryptocurrency exchange Huobi halts derivatives trading in China as Beijing turns up heat
- Huobi has added China and the United Kingdom to its list of prohibited jurisdictions to trade derivatives
- This followed Huobi’s decision in May to suspend bitcoin mining services and sales of cryptocurrency mining equipment in China
Users in mainland China will be barred from Huobi’s derivatives trading services from this week, but existing clients can still use the exchange for spot trading. The news comes days after Huobi cut the amount of leverage available to users in the country to 5 times, down from 125 times previously.
These moves by Huobi, which was founded in China in 2013, signal that “it won’t provide products of high risk and leverage to Chinese users, complying with Beijing’s crackdown on cryptocurrencies to avoid financial volatility”, said Winston Ma, an adjunct professor at New York University (NYU) School of Law and author of the book The Digital War: How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace.
Cryptocurrency volatility highlighted by China’s recent crackdown and Elon Musk comments
Yang Linke, co-founder of BTCChina, said the company will invest in other blockchain-related businesses.
Analysts indicated that cryptocurrency exchanges are now distancing themselves from clients in mainland China to avoid being targeted by regulatory authorities.
“For the past few weeks, Beijing’s regulators focused on [cryptocurrency] mining,” said Ma of NYU’s School of Law. “The crackdown on trading and exchanges may just be starting.”
Prices of cryptocurrencies have seen sharp fluctuations amid this regulatory crackdown in major economies. Bitcoin, the world’s biggest cryptocurrency in terms of trading volume, was priced at US$34,000 by Tuesday noon, down from its peak of about US$60,000 in mid April.