As part of its attempts to prevent speculation, Huobi, the second-largest crypto exchange by trading volume, has implemented a 24-hour requirement before clients may withdraw crypto money in over-the-counter (OTC) transactions.
Users may only withdraw their virtual coins 24 hours after purchasing them, according to the new regulation, which was published on June 2 by Huobi‘s Chinese operating unit.
The crypto exchange also stated that a 36-hour rule might be necessary for some circumstances, characterizing such circumstances as a situation in which clients are potentially exposed to higher risks, as determined by the company’s risk control system. For example, if the company’s risk algorithm determines that a user is a high risk, they may be blocked from withdrawing their coins for up to 36 hours.
The company’s new metrics aim to ensure the security of customers’ token holdings to minimize losses caused by the entrance of hazardous assets and protect users’ cash. The move is part of the company’s attempts to progressively roll out various risk-control techniques that will affect a large number of people.
The company’s latest pledge is part of a 36-hour waiting period for crypto withdrawals for some high-risk consumers, which Huobi implemented in August of last year.
China’s ongoing crackdown on crypto investors, which has recently targeted cryptocurrency mining and trading, banking services, and online platform payments, is seen to be effectively linked to the new campaign.
As a result of these restrictions, a significant portion of cryptocurrency trading in the country has migrated to the OTC market, which is essentially unregulated and assures that fiat money transfers do not occur directly through exchange trading desks.
OTC transactions are widely assumed to be used as a conduit for capital outflow and money laundering and feed speculation that fuels the extreme volatility of cryptocurrency values.
The Chinese Government’s Cryptocurrency Crackdown
The move to enforce the 24-hour limit for cryptocurrency withdrawals comes just days after Huobi added China to its list of forbidden territories for trade derivatives. The nation continues to tighten down on companies that provide cryptocurrency services.
Since last week, users in China have been prohibited from Huobi‘s derivative trading services since last week due to the continuing crackdown. As a result, the crypto exchange reduced the amount of leverage offered to customers from 125 times to 5 times.
Huobi, which launched its crypto business in China in 2013, said it would not provide high-risk, high-leverage products to Chinese customers, in line with the country’s efforts to reduce financial volatility by cracking down on crypto-assets.
While Bitcoin was trading at about $64,804.72 in April, the top cryptocurrency dropped over half of its value a month after China instructed local banks not to engage in any cryptocurrency-related operations. It’s the latest evidence that China is working to tighten crypto mining and trade loopholes.
In May, China’s central bank labeled speculative trading of crypto tokens as a threat to the economy’s and financial markets’ regular operation.