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- Binance Exchange prohibits Hong Kong from opening new futures accounts in addition to accessing other derivatives products on its platform.
- The exchange continues to face regulatory challenges in different parts of the world for its apparent support of illegal transactions.
The world’s largest crypto exchange Binance Holdings Ltd. will not allow the opening of new futures accounts in Hong Kong. Reporting this development via Twitter, Binance said that the change was effective immediately. Binance posted on its website.
We will be restricting Hong Kong users in respect of derivatives products (including all futures options, margin products, and leveraged tokens) in line with our commitment to compliance,
In late May, Hong Kong enforced stringent regulatory requirements surrounding crypto exchanges operating within its jurisdiction. New legislation requires such firms to be licensed by the city’s watchdog. Exchange platforms also have to oblige by anti-money laundering and counter-terrorism financing rules. Additionally, the government restricted the exchange’s services to serve only professional investors and not retail traders.
Also through Twitter, Binance communicated that it “is the first major crypto exchange to proactively take this action.” It is, therefore, likely that other firms offering the same services will have to take action moving forward. This may mean either abiding by the authorities’ regulations or shutting down services.
Binance regulatory compliance issues
Lately, Binance has been entangled in several regulatory controversies in various regions including the US, UK, Malaysia, and Thailand. All this is reported because the firm ‘provides’ ground for executing illegal transactions. In order to keep in business, the company has had to put a halt on some of its “high-risk services.”
Most recently, Binance announced suspending derivatives trading from the European market. The shutdown, according to the company, would start in Germany, before proceeding to Italy and the Netherlands. On top of that, the Malaysian Securities Commission announced a complete cessation of Binance’s regional activities. Authorities in the country claim that Binance began operations in the Malaysian jurisdiction without first acquiring government permission.
In April, the German Federal Financial Supervisory Authority (BaFin) warned Binance that it could suffer heavy fines. The exchange, as BaFin notes, has been offering fractionalized stock tokens without providing the required prospectus.
Furthermore, UK, Japan, and the Cayman Islands’ regulators have warned consumers that Binance is unauthorized to perform business in those countries. UK banks and the SEPA Euro bank have also blocked account holders from depositing money into the exchange.
Reforming into a financial institution
While Binance’s latest move may protect new consumers, it tends to reflect more on the government crackdowns on cryptocurrencies. Last month, however, the exchange noted at a press conference it is transitioning from a tech startup to a financial institution. Moreover, Binance promised to comply with all related licensing procedures for the same. CEO Changpeng “CZ” Zhao said at the time that the exchange would apply for licenses “everywhere.”
As for Hong Kong, part of Binance’s official statement read:
Hong Kong users have a 90-day grace period to close their open positions. No new positions can be opened during the grace period.
