Binance crypto exchange has announced the closure of its crypto derivative services offering in Hong Kong with immediate effect. The announcement comes just a couple of weeks after the exchange discontinued its derivatives offering across Europe. The slew of announcements comes in the light of growing regulatory scrutiny around the crypto exchange from nearly a dozen countries.
With immediate effect, users from Hong Kong cannot open new futures accounts on Binance.
As a market leader, #Binance is the first major crypto exchange to proactively take this action.
— Binance (@binance) August 6, 2021
Starting today Hong Kong customers won’t be able to open any new derivative accounts with Binance. The exchange has also said that with effect from a date to be announced in a later notice users would be given a 90-day grace period to close their open positions.
“As the market leader, Binance constantly evaluates its product and service offerings. 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.”
Earlier, Hong Kong’s Securities and Futures Commission (SFC) has issued a regulatory warning against Binance for operating without a license on July 16.
Regulators around the globe have shared their concern with high leverage offerings for crypto derivatives products by Binance and other exchanges. Binance was known for offering some of the highest leverage options up to 125X for certain pairs. This is a key reason many regulators don’t allow crypto exchanges to offer derivatives offering.
Binance is Working to Become More Compliant
The world’s top cryptocurrency exchange has taken a slew of measures over the past month to mend its way with regulators. It has recently announced the decrease in leverage offering from over 100X to 20X for new customers and working towards implementing the same for existing derivatives traders as well. The CEO of the exchange Changpeng Zhao had also claimed that the company is looking to build local headquarters around the world wherever it is currently operational.
.@binance futures started limiting new users to max 20x leverage last Monday, Jul 19th, 7 days ago. (We didn't want to make this a thingy).
In the interest of Consumer Protection, we will apply this to existing users progressively over the next few weeks.
Stay #SAFU. 🙏
— CZ 🔶 Binance (@cz_binance) July 26, 2021
Binance’s lack of headquarters has been another major concern for regulators who believe it becomes increasingly difficult for them to enforce action against the exchange in case of any complaint or fraudulent activity.