Residents of China will no longer be able to use the Huboi and Okex for cryptocurrency trading and mining.
Major Updates
- Huboi and Okex have ceased trading and mining operations in China.
- The suspension is said to be a precautionary measure for Chinese investors.
- Huobi.pool, the world's eighth largest mining pool by hash rate, claims that FIL miners will be unaffected.
The news broke on Sunday, following the CFA's meeting to warn against Bitcoin mining activities. Furthermore, China has prohibited financial firms and payment services from offering cryptocurrency trading services and has advised customers not to trade in cryptocurrency.
According to the ban, certain organisations, including banks and online payment platforms, are not permitted to provide clients with any cryptocurrency-related services, including registering, trading, clearance, and settlement, three industry bodies said in a joint statement on Tuesday.
Huboi and Okex to Discontinue Some Services in China
Huboi will no longer provide cloud mining and cryptocurrency services to mainland China. This will include a halt in miner sales. Okex, on the other hand, will suspend all OKB transactions.
What is being put on hold in China?
- Transactions involving OKB
- Trading in cryptocurrency derivatives
- Services for cloud mining
- Mining machine sales
Reasons for Huboi and OKex's Decision
China has always been opposed to the development of Bitcoin. According to a notice from the China Securities Regulatory Commission, China's central bank has prohibited financial institutions from handling bitcoin (BTC, +6.89 percent ) transactions. Then, in 2017, the Chinese central bank declared initial coin offerings to be illegal, causing bitcoin's price to fall.
In order to protect Chinese investors, the exchanges are also temporarily suspending crypto derivatives trading. Crypto derivatives are secondary contracts or financial instruments whose value is derived from a primary underlying asset. The primary asset in this case would be a cryptocurrency such as Bitcoin. Futures, options, and perpetual contracts are the most commonly used derivatives in the cryptocurrency industry.
Huobi and Okex aren't the only cryptocurrency exchanges that will refuse to allow Chinese traders to use their platforms. Amber Group, a Coinbase-invested company, notified some users via text message that its APP products would be unavailable to Chinese users starting June 1.
The Implication for Chinese Users!
According to Colin Wu, a Blockchain Journalist, “Those who have already purchased Bitcoin mining machines will be removed from the shelves; however, Huobi stated that FIL mining machines will not be affected.” Wu recently revealed in a Tweet that the proposed actions are simply spontaneous risk-aversion behavior. Similar statements will become more common in the future. When the Chinese government announces further crackdown measures, the market will almost certainly experience another period of panic.
Conclusion
Recall that Huboi launched Perpetual Swaps in 2020 to help traders capitalize on market volatility. As things stand, it's difficult to predict how current dynamics will affect Chinese investors. Not to mention that Chinese users will account for 60% of total traded perpetual contracts.
Question of the Day
What more impacts do you think Huboi and Okex's services suspension would have on Chinese user?
