21 Dec 2021

The consequences of the Chinese bitcoin ban are unfolding

The final impact of the Chinese bitcoin ban from September is unfolding. After gradually removing Chinese mainland users, Huobi’s share of the global open interest has fallen to 2%, down from its Feb 15th, 2020 peak of 20%.
Source: Skew
Huobi has accelerated its retirement of Chinese mainland customers. On Sept 24th, Huobi ceased registrations for new mainland Chinese customers. On Dec 15th, Huobi ceased spot trading for Chinese citizens. Additionally, from Dec 15th to Dec 31st, Chinese mainland customers are only able to sell digital assets. Huobi also closed its derivatives desk for China-based Huobi users in November, leading the exchange’s market share of the global open interest to plunge from 6% to 2% overnight as the October contract expired. The Chinese ban has also been reflected on other exchanges. Both OKEx and Binance have made announcements of restrictions for Chinese mainland citizens. However, the public statements from OKEx are far more ambiguous than those of Huobi. The exchange has publicly stated that the exchange website will be inaccessible for mainland Chinese traders. Further, the exchange has stated that it will not set up offices and teams in mainland China while maintaining the policy of “exiting the Chinese mainland market.” In OKEx’s subreddit, the OKEx helpdesk shared a screenshot from its P2P market, currently allowing traders to trade using the Chinese Yuan. OKEx’s more muted response to the Chinese September ban of bitcoin might explain how OKEx has maintained a fairly stable market share in the futures market from September. Nevertheless, OKEx has experienced a massively declining market share in the last two years. In April 2020, OKEx accounted for 30% of the open interest in the futures market, in stark contrast to today's 8% market share. Earlier this year, we published a research piece disclosing how Huobi and OKEx were the most important markets in bitcoin’s price discovery. Needless to say, this has likely changed drastically since the paper was released, with FTX, Binance, and CME now dominating the market.
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