Prompted by China’s recent declaration that crypto transactions have become illegal in the country, two key exchanges with Chinese roots have put forward their plans to terminate users from mainland China. 

Huobi and Kucoin cite compliance as the main factor behind their plans. Kucoin notes in a message to affected users (in Chinese) that it conducted a technical self-inspection to ensure that its business process complies with the regulatory requirements of mainland China. 

“For users in mainland China, KuCoin plans to complete an orderly settlement before 24:00 (UTC+8) on December 31, 2021, under the premise of ensuring the safety of user assets,” the exchange states, following the latest policies announced by the Chinese mainland government. “To protect the rights and interests of users, we strongly recommend relevant users to transfer their assets to other platforms before 24:00 (UTC+8) on December 31, 2021.”

Huobi is the first major exchange with links to China to first act on eliminating existing Chinese users. It announced that it has ceased account registration for new users in Mainland China effective September 24 and will gradually retire existing Mainland China user accounts by Dec 31. 

Last week, the exchange sent out a tentative schedule that it plans to follow as it retires existing mainland China user accounts engaged in derivative trading. 

It says new coin-margined futures will not be generated after delivery of existing ones at 8:00 (UTC) on Oct 8, 2021 while only quarterly and bi-quarterly coin-margined futures will continue to exist after delivery at 8:00 (UTC) on Oct 15, 2021.

Quarterly and bi-quarterly coin-margined futures will be delivered by Oct 29 using the weighted average of the spot index prices set in the last hour as the delivery price. Coin-margined swaps are to be delivered and settled by 3:00 (UTC) on Oct 27 while USDT-margined swaps are to be delivered by Oct 28. 

Non-Chinese users will not be affected and will resume derivative trading after retiring all mainland China user accounts in time for China’s most severe crypto crackdown yet.

Other exchanges that have joined in taking actions in line with the new Chinese government policies so far include Gate and CoinEx. 

CoinEx is to completely retire users in Mainland China based on accounts verified as Mainland China citizens or bound with a mobile phone number from Mainland China. “After 16:00 on October 31, 2021 (UTC+8), the ONLY service available for these accounts will be withdrawal, that is, functions such as deposit and trading will be closed and ONLY the withdrawal service is supported,” it says. 

Meanwhile, on the other hand, Gate.io is reportedly putting a hold on onboarding new Chinese users while existing users are not supposed to be affected by the news.

There have been concerns that the new regulatory policies will continue to cause the entire crypto industry to move out of China including exchanges and other crypto institutions migrating to Singapore. Among other things, the move stands to alienate the Chinese community from the rest of the crypto space to avoid coordinated bearish movements while slowing innovation in the crypto/blockchain space and hurting the ability to compete.