Crypto exchange Huobi is prohibiting users in China from trading derivatives, according to an updated user agreement.
In its updated user agreement, the crypto exchange has added China to its list of jurisdictions which are prohibited from using its derivatives trading services. However, Chinese users can still use the exchange for spot trading.
The update comes just after Huobi recently reduced the amount of leverage available to users in China. Due to regulatory concerns, the amount was reduced from 125X to 5X. Additionally, new users in China are restricted from utilizing leverage, while existing users still can.
Chinese crypto crackdown
The update to Huobi’s user agreement comes in light of Chinese recent crackdown on cryptocurrencies. In May, China banned financial institutions and payment companies from providing services related to cryptocurrencies. The news came just after Tesla announced that it would no longer accept Bitcoin as payment. The pair of stories sent the price of bitcoin tumbling below $40,000, where it is now languishing.
The People’s Bank of China recently reaffirmed this ban, ordering major banks and payment platform Alipay to cease providing services linked to cryptocurrencies. Specifically, it ordered all banks and payment institutions to strictly implement the ‘Notice on Preventing Bitcoin Risk’, and ‘Announcement on Preventing Token Issuance Financing Risk.’. The PBOC said that virtual currency trading activities disrupt the normal economic, financial order. They also contribute to risks of criminal activities like illegal cross-border asset transfers and money laundering.
In addition to prohibiting crypto services, China is also cracking down on cryptocurrency mining. The announcement surprised many, as nearly 65% of the global Bitcoin hash rate came from China. The Chinese authorities followed through with the crackdown by ordering an investigation into the illegal use of state electrical power for mining in Yunnan Province. This was followed by similar measures being taken in the Sichuan Province, notable for its use of hydropower to fuel mining. These steps have triggered a mass exodus of cryptocurrency miners from China, some of whom are relocating to Texas.