In this letter, Huobi exchange cites AML regulations imposed by Chinese regulators including the People’s Bank of China (PBOC) and China Banking Regulatory Commission. some of users of Huobi must now provide:

1.Account information used to log in at the exchange.2. Explanations and evidence of the sources of their deposits.

2.Destinations and evidence of the bitcoins or other cryptocurrencies withdrawn.

3.Explanations of the purposes of their withdrawals.

As proof of their funds, Huobi customers are required to provide for a detailed list of historical transactions of the customer’s bank account used to deposit funds on exchange. The burdensome requirements include:

1.The bank transfer records to the exchange’s account.

2.Written explanations of the sources of the funds transferred.

3.Relevant proof that can back up the explanations given above.

For instance, Alice wants to purchase 10,000 RMB worth bitcoin. Firstly, she needs to authorize bank to transfer the money to her Huobi account. To better understand this process, we assume that Alice’s already transferred 10,000RMB from her Bank of China account to huobi account, authorized by HSBC. After the transaction completed, Huobi will receive the funds from HSBC. Hypothetically, a strict KYC regulation will require Alice to explain the source of the funds, details of the transactions, destinations of bitcoins and where the funds will be send to.