Chinese cryptocurrency exchange Huobi Global has stopped account registration for new customers in mainland China effective Sept. 24 and will close down the accounts for existing mainland Chinese users by Dec. 31, according to an announcement on Sunday.
Prices of the exchange’s token plunged on the news, with the Huobi Token down 46% in the past seven days, according to CoinGecko data.
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Huobi’s move follows China’s announcement on Friday banning cryptocurrency trading and mining. “We will inform users of the specific arrangements and details through official announcements, e-mails, text messages, etc.,” Huobi’s announcement said.
While this is not the first time that China has banned cryptocurrency trading and mining, its latest notices — the most detailed and expansive yet — reflect how crypto regulations and enforcement actions in the world’s most populous country are tightening with each announcement and sounds the death knell for the Chinese cryptocurrency exchanges such as Huobi in the country.
Huobi, one of the world’s biggest cryptocurrency exchanges, had already been scaling back its operations and product offerings in China. In July, Huobi closed its Beijing Huobi Network Technology Co. Ltd entity and tightened over-the-counter trading restrictions. The exchange, in June, stopped offering crypto derivatives trading to users in China and Taiwan. The exchange had also stopped hosting Bitcoin mining services and providing leverage trading.
Friday’s announcement specifically targeted overseas crypto exchanges such as Huobi that have a large Chinese user base. The notice explicitly mentioned that the provision of crypto services by overseas exchanges to Chinese residents is illegal and banned — for the first time — the provision of other services, from marketing to IT, to such crypto firms.
“We believe that this latest announcement jointly issued by the People’s Bank of China and other Chinese regulatory authorities should be observed, and its requirements strictly implemented,” Du Jun, co-founder of Huobi Group, the parent company of the Huobi Global exchange, told Forkast.News in an email.
“Huobi Global has been operating for eight years, at one point as the largest exchange in the world by trading volume,” Du said. “We have been able to accumulate tens of millions of users around the world by sticking to our core principles of compliance and safety, taking all necessary actions to protect our users and their assets. This is why in alignment with such principles, Huobi Global made the decision to gradually retire all user accounts in mainland China by the end of the year.”
According to Du, Huobi customers will be able to transfer their assets to other exchanges or wallets over the next few months. Specific measures and operating rules will be outlined in future announcements. Users in other countries and regions outside of mainland China will not be affected.
Huobi’s latest move to close down the accounts of its users in mainland China is likely to hit the exchange hard in the short term, but the company intends to double down on its compliance efforts and grow its international presence.
“Due to historical reasons, we do have a certain proportion of our user base in mainland China. Retiring mainland Chinese user accounts will have a certain impact on the company’s revenue in the short term,” Du said. “However, Huobi’s diversified businesses outside of China have reached nearly 70% in terms of trading volumes, and this proportion has been on the rise. Therefore, we expect that any short-term impact on Huobi revenues will be mitigated as our global business continues to grow.”
Huobi Global has shown strong growth in Southeast Asia and Europe, Du said, adding that Huobi’s business scope currently covers more than 140 countries across five continents. “Today, we possess legal business licenses in several countries, and continue to develop diversified businesses through a combination of building out our own local teams and cooperating with local license partners.”