Houbi, the second largest crypto exchange by trading volume, recently announced introduced a 24-hour requirement before customers withdraw crypto funds in over-the-counter (OTC) transactions to prevent speculation.
Based on the new rule, users will not be able to withdraw their virtual coins until 24 hours later after purchasing their tokens; The Huobi operating unit in China announced the statement on Friday, June 2nd.
The crypto exchange also said that a 36-hour rule might be required in certain cases, describing such cases as a condition where customers are potentially at higher risk, as recognized by the company’s risk control system. Some users may be prevented from withdrawing their coins for up to 36 hours if the company’s risk system considers them to be high risk.
The announcement is a blow to users who rely on Huobi crypto services and crypto investors in China amid ongoing crackdown on the industry.
The company’s new measures are aimed at maintaining the security of customers ‘token holdings in order to avoid losses from the inflow of risky funds and to protect the safety of users’ funds. The move is part of the company’s efforts to gradually introduce a number of risk control strategies that involve many users.
The company’s latest commitment is part of a precondition of up to 36 hours for crypto withdrawals for certain high-risk users, a move Huobi introduced last August.
The new initiative is effectively linked to China’s ongoing crackdown on crypto investors who recently targeted cryptocurrency mining and trading, banking services, and online platform payments.
As a result of such a restriction, a significant volume of cryptocurrency trading in the country has shifted to the OTC market, which is essentially unregulated and ensures that the transfer of fiat currencies is not done directly through the trading desks of the exchanges.
OTC transactions are primarily believed to be used as a gateway for capital outflows and money laundering, fueling speculation that fuel the wild volatility of crypto prices.
China’s crypto penetration
Efforts to implement the 24-hour crypto withdrawals rule come a few days after Huobi added China to its list of prohibited jurisdictions for trade derivatives as the country continues to crack down on companies offering cryptocurrency services.
Due to the ongoing crackdown, users in China have been banned from Huobi’s derivatives trading services since last week. As a result, the crypto exchange has reduced the leverage available to users in the country to five times what it was 125 times before.
Huobi, which started its crypto business in China in 2013, stated it would not offer high-risk and leverage products to local users in order to comply with the country’s crackdown on crypto assets to avoid financial volatility.
While Bitcoin was trading at around $ 64,804.72 in April, with the leading cryptocurrency losing nearly 50% of its value a month later after China urged local banks to ban cryptocurrency-related activities. It’s the latest sign of China’s plan to close loopholes in crypto mining and trading.
In May, China’s central bank identified speculative trading in crypto tokens as risks that would disrupt the normal functioning of the economy and the financial market.
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