Huobi is imposing a 24-hour crypto withdrawal delay to minimize speculation

The exchange’s decision is in line with Beijing’s ongoing and multi-pronged crackdown on the country’s crypto investors to curb both capital outflows and volatility in the cryptocurrency market.

Huobi Global, currently the world’s second largest cryptocurrency exchange by daily trading volume, has introduced a 24-hour token withdrawal delay for all OTC trades.

This decision is a severe blow to all Huobi users, some of whom will be banned from withdrawing for 36 hours if the exchange’s rating system considers them to be particularly risky. Huobi said the move is part of an effort “to gradually introduce multiple risk control strategies that involve a wider segment of users.” Thong added that it is hoped that the delay will “be effective in avoiding user losses due to the inflow of risky money into the safety of users’ assets. “

In particular, Huobi has implemented a tighter version of this measure since last August when it first introduced a token withdrawal delay of up to 36 hours for certain users who are at higher risk.

The new, broader initiative appears to be in line with Beijing’s ongoing and multi-pronged crackdown on the country’s crypto investors, which recently targeted the mining sector, banking services and online cryptocurrency footprint. In response to these restrictions, a large volume of the country’s crypto trading has shifted to the OTC market, which is relatively unregulated and ensures that fiat currency transfers don’t happen right on handover.

The high level of activity in the OTC market during the regulatory period is an established pattern in China: In 2017, when Beijing first cracked down on cryptocurrency exchanges, trader investments have adapted similarly by switching to OTC trading. Huobi itself first launched its OTC service in November 2017 amid a series of increasingly stringent restrictions on cryptocurrency trading in the country.

Today’s news contradicted the expectations of some analysts who had expected Beijing to take a gentler approach to OTC trading as the sector is viewed as a lower risk of capital flight than traditional exchanges. However, the South China Morning Post reported today that the OTC sector is viewed by the authorities as a gateway to capital outflows and money laundering, causing high volatility in the cryptocurrency market.

Late last month, Huobi updated its user agreement document and banned crypto derivatives trading for all existing customers in China and a variety of other jurisdictions. In early June, the platform intervened to prevent new users from trading derivatives while reducing the allowable trading leverage from 125x to less than 5x.

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