This came from the fact that it was dangerous for Jews to walk in the streets at this night since many Christians in Europe would riled up and in force against Jews often beating them or worse. People were told not to go out in the streets and go to the Beit Midrash to learn (which was practically almost the only reason to leave home) for safety reasons. This is not in effect today though and it did not exist among Sefardim, why? Because this danger and precaution was not necessary for Sefardim but was necessary for those who lived among Christians especially those who murdered Jews.
from the article: How Hasidic Jews 'celebrate' Christmas