Huobi is probably the first cryptocurrency exchange to have taken the first step against allowing Chinese traders to trade on its platform. This comes just a day after the country’s watchdogs issued a fresh crackdown on Bitcoin mining, trading activities among others.
Huobi happens to be one of the most prominent venues for cryptocurrency traders and investors in Asia. However, following the new Chinese restrictions, the exchange had reportedly banned Chinese users on its platform from opening contract and options transactions.
While there are no such prohibitions with respect to the spot markets, according to the report, the restrictive measures are taken by Huobi only for the users wanting to open positions on derivatives markets.
This was revealed by the regional reporter Colin Wu in a series of tweets and went on to admit that platforms such as Binance, Huobi, Bybit, and OKEx are also the world’s largest cryptocurrency derivatives exchanges. Their trading volumes far surpass the spot, and “profits are also very rich”. He also added,
“The participation of retail investors is easy to lose money, which is called ‘contract casino’.”
The Great Chinese FUD: Will Others Follow Huobi’s Footsteps?
It is still early to say if other cryptocurrency platforms would follow Huobi’s suit. But prohibiting users from leveraging futures and options space is definitely a huge blow since the derivatives sector is unarguably a more lucrative avenue for the investors than spot.
Besides, the development comes just a day after an “outrageous” report stemmed from China’s 51st meeting of the Central Financial and Economic Affairs Commission that was led by the organization’s director, Liu He.
In it, the authorities had discussed crypto mining in the country and singled out Bitcoin. It was the first such instance when the highest level of the country’s government proposed a serious clampdown in crypto mining.
Following the development, major Bitcoin bull and CEO of MicroStrategy, Michael Saylor was bullish on the entire episode. He is of the opinion that China’s ban could, in fact, ignite a bullish cycle for the crypto-asset. His tweet, along similar lines, read:
“A crackdown on miners in China would radically reduce the carbon footprint of Bitcoin mining, increase the profitability of all the remaining #Bitcoin miners, reduce nagging China FUD, support progress toward our ESG goals, & drive up the value of $BTC. We should be so lucky”
Huobi’s latest move did not have any effect on the broader cryptocurrency market. However, its combined valuation had dropped to $1.5 trillion and was still reeling under the previous negative slew of developments that unfolded right from Elon Musk’s fallout. Yesterday’s fresh salvo by the Chinese authorities also ignited a brutal sell-off as Bitcoin soon noted a double-digit fall after recovering above $40k briefly.