Inside a Bitcoin mining factory Photo: AFP
Cryptocurrency exchange platform Huobi has suspended its cryptocurrency derivatives trading for Chinese investors on Monday, who were banned earlier from other types of crypto businesses amid Beijing’s stepped-up crackdown against cryptocurrency trading.
Huobi, one of the top three exchanges founded in China, updated its user agreement Monday night, including Chinese investors in the list of the users that are banned from trading of cryptocurrency derivatives.
The other two crypto exchange platforms are Binance and OKEx, which also have wide Chinese user bases. Cryptocurrency derivative is one of the three exchanges’ main businesses and it is not known whether the other two exchanges will follow the move.
Last week, Huobi reportedly suspended services for new users in the Chinese mainland. It also suspended Bitcoin mining services and sales of mining equipment in the Chinese mainland in June. The company said it will focus on expanding its business overseas.
Starting in early June, searches concerning major cryptocurrency exchanges have been blocked on China’s social media platforms including Weibo. The Chinese government has been tightening scrutiny over digital currency trading and mining, to minimize disruptive risks to the country’s financial system and illegal activities including money laundering.
It is estimated that about 90 percent of the country’s Bitcoin mining capacity has been put on hold now.
Some industry observers told the Global Times that more than 2 million Bitcoin mining machines are now idle across the Chinese mainland, with emerging overseas markets such as the US and Kazakhstan only able to accommodate 5 percent of the capacity.
It is estimated that it may take about half a year for the global crypto network’s processing power – to which China accounts for roughly one third of the total – to bounce back near normal levels.
Outside of China, cryptocurrency exchanges are also facing growing challenges amid a global regulatory tightening.
Britain’s Financial Conduct Authority said on Saturday that Binance Markets Limited, the UK division of Binance, “is not permitted to undertake any regulated activity in the UK,” the CNBC reported.