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The world’s second-largest crypto exchange by daily trading volume, Huobi, has introduced a 24-hour delay on token withdrawals for over-the-counter (OTC) transactions. The move, which is aimed at discouraging speculation, comes amidst China’s crackdown on crypto mining and trading.
With Huobi’s new policy in place, crypto traders will only be allowed to take out their tokens 24 hours after making the purchase, according to the South China Morning Post. There are even cases where the exchange would impose a 36-hour delay.
“All users (including advertisers) implement the ‘T+1’ policy, that is, the assets after OTC purchase can only be withdrawn after 24 hours,” Huobi wrote on its website. “It takes 36 hours for some users to withdraw their assets after OTC purchase.”
A Huobi spokesperson explained on Friday that cases that require 36 hours of delay are those where “users are potentially subject to higher risks.” The company representative added that Huobi’s risk control system will be able to detect such cases but did not reveal the specifics on how the system chooses what it considers a potentially high-risk case.
Cointelegraph noted that the crypto exchange’s new policy “seems to align squarely with Beijing's ongoing and multi-pronged crackdown on the country's cryptocurrency investors, which has recently targeted the mining sector, banking services, and crypto's online footprint.” Since the restrictions started, China’s crypto trading has shifted to the OTC market, which is relatively unregulated.
Analysts expected Beijing to “take a lighter-touch approach to OTC trading” as the segment is deemed to pose lower capital flight risks compared to regular crypto exchanges. However, it appears that Chinese authorities believe that “OTC transactions are being used as a gateway for money laundering and capital outflow, as well to drive speculation that fuels the wild volatility of cryptocurrency prices,” according to SCMP.
With increasing government scrutiny, Huobi banned crypto derivatives trading for Chinese customers last month. The crypto exchange also reduced allowable trading leverage from 125x to less than 5x.
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