It was not a good month for Huobi, a leading Chinese cryptocurrency exchange, after it announced it would stop allowing users to trade derivatives such as bitcoin futures.
Huobi is a cryptocurrency exchange that has become powerful enough to make it a regulatory target. The Chinese exchange has banned all trading of crypto derivatives in the country. The shut down is a precautionary measure to prevent money laundering and other illicit activities, according to the exchange.
Huobi, China’s biggest cryptocurrency exchange, has announced that it will be banning off-exchange trading of bitcoin futures contracts and all other derivatives contracts. The move comes as the Chinese government continues to clamp down on exchanges and activities related to cryptocurrency, especially in the wake of the January 2018 crypto bubble.. Read more about what is crypto trading and let us know what you think.
Cryptocurrency platform Huobi has updated its user agreement document to ban cryptocurrency derivatives trading for customers in China.
According to an updated section of the user agreement on Huobi Global’s website, the ban on crypto derivatives trading applies to users in countries such as China, Taiwan, Israel and Iraq. Other blocked countries include the United Kingdom, where only residential customers are allowed, as well as Bolivia, Bangladesh, Ecuador and other countries.
The ban on crypto-derivatives trading also adds to long-standing bans of its platform in places like Hong Kong, Japan, Cuba, Iran, North Korea, Sudan, Canada and the United States, among others. The platform has warned that users who violate these restrictions risk losing their accounts.
Huobi’s ban on crypto-currency derivatives exchanges for Chinese users is likely due to a further crackdown on crypto-currencies by authorities in Beijing. In early June, the platform banned new users in the country from trading derivatives of cryptocurrencies and also lowered the permitted leverage from 125x to less than 5x.
In recent weeks, the Chinese authorities have stepped up their repression and have even targeted the mining sector: Nearly 90 percent of Bitcoin (BTC) miners in the country have been forced to quit.
Some companies have begun to move abroad, and the bitcoin hashrate is expected to suffer the greatest loss of complexity as much of the network’s hashing capacity is shut down, at least temporarily.
Related: Cryptocurrency exchange Huobi has reportedly stopped allowing new users to trade derivatives.
The ban on Huobi is also likely to limit options for Chinese cryptocurrency derivatives traders. Platforms like Binance and OKEx will likely be the next port of call for those looking for highly leveraged cryptocurrency contracts.
Binance, for its part, is also subject to increased regulatory oversight. Last week, the exchange giant received notifications from regulators in the United Kingdom, Japan and Ontario, Canada.
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