Major Bitcoin exchanges in China, including Huobi, OKCoin, and BTC China, have suspended Bitcoin withdrawals for over a month. This pause reflects ongoing regulatory efforts to establish clearer guidelines for the cryptocurrency market. The People’s Bank of China (PBOC) recently distributed an internal document titled "Related Guidelines" to several large trading platforms in Beijing and Shanghai for discussion.
According to sources familiar with the matter, the guidelines emphasize that platforms must verify client identities and comply with anti-money laundering (AML) regulations similar to those in the traditional banking sector.
Multiple platforms have received similar versions of the document. Beijing-based exchanges obtained the draft about a week ago, while those based in Shanghai received it more recently.
The guidelines require trading platforms to collect comprehensive customer information, indicating a tightening regulatory environment for Bitcoin transactions.
A Huobi user reported that when attempting to withdraw RMB a few days ago, the platform prompted them to upload photos of their ID card held in hand, with strict requirements that the documents must be fully visible and unobstructed.
A Huobi executive explained that, following regulatory requirements, any user activity involving RMB must complete C2 verification (secondary RMB authentication). This process is triggered when users attempt to withdraw RMB. Previously, the standard authentication level for regular users was C1, which only required entering an ID number. For accounts that trigger AML risk alerts, the platform mandates C3 authentication, which involves video verification and answering questions.
On February 9, BTC China, Huobi, and OKCoin announced the suspension of Bitcoin and Litecoin withdrawals. The stated goal was to curb speculation and prevent illegal activities such as money laundering, pyramid schemes, and unauthorized foreign exchange transactions. This move followed a warning from the PBOC that platforms violating AML or foreign exchange regulations could be shut down.
Development and Approval of New AML Systems
With the development and upgrading of AML systems, will Bitcoin withdrawals resume? Some platform executives have stated that their updated AML systems are ready and awaiting regulatory approval. Others are still making modifications based on the latest regulatory feedback.
One executive revealed that regulators are well aware of each platform's progress. However, the exact timing for inspection and approval remains uncertain, as the central bank may be waiting for the right moment. The guidelines are still not finalized; they are currently normative documents and may undergo further revisions. Platforms continue to cooperate with the PBOC and welcome a balanced, risk-based regulatory framework.
Impact on Trading and Market Dynamics
The restrictions on withdrawals have significantly affected trading behavior over the past month. Previously, users could withdraw Bitcoin from domestic platforms, transfer it to international wallets, and trade on overseas platforms denominated in currencies like the US dollar to profit from exchange rate differences or arbitrage opportunities.
During the withdrawal suspension, the trading volume and price of Bitcoin on the three major Chinese platforms have been lower than on international exchanges. At the time of writing, the price on BTC-E was $1,142 (approximately ¥7,882), while BTC China quoted $1,112 (around ¥7,660).
Another example occurred on March 10, when Bitcoin's price surged by 10% to a record high of $1,325, driven by market expectations that the U.S. Securities and Exchange Commission (SEC) might approve the first Bitcoin ETF. Around the same time, Huobi's报价 was ¥8,030 (approximately $1,163).
Frequently Asked Questions
Why have Bitcoin withdrawals been suspended in China?
The suspension is part of regulatory efforts to prevent illegal activities like money laundering and unauthorized foreign exchange trading. Exchanges are upgrading their systems to comply with new anti-money laundering guidelines.
What is the C2 authentication required by some platforms?
C2 authentication involves submitting a photo of yourself holding your ID card. It is triggered when users attempt to withdraw RMB and is part of enhanced customer verification processes.
When will Bitcoin withdrawals resume?
Exchanges are awaiting approval from the People’s Bank of China. The timeline depends on regulatory review and the finalization of new guidelines.
How has the withdrawal suspension affected Bitcoin prices in China?
Prices on Chinese platforms have often been lower than on international exchanges, and trading volumes have decreased due to restricted arbitrage opportunities.
What are the new guidelines from the PBOC?
The guidelines focus on customer identity verification and anti-money laundering compliance. They are still under discussion and subject to change.
Can users still trade Bitcoin on Chinese platforms during the withdrawal suspension?
Yes, users can still buy and sell Bitcoin on these platforms, but they cannot withdraw Bitcoin or fiat currency until the suspension is lifted.