The Bitcoin exchange Binance has cut off Hong Kong users from trading crypto derivatives, including futures, options, leveraged tokens and margin products. The move was explained as due to obligations to comply with local law.
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
“With immediate effect, users from Hong Kong will not be able to open new derivative product accounts. From the date to be announced in a later notice, users will be given a 90-day grace period to close positions. During this period, new positions cannot be opened,” the notice says.
The CEO Changpeng Zhao said Binance would take a more proactive stance on regulatory compliance, moving away from a reactive approach in favour of a preventive one. He stressed that the restrictions on Hong Kong residents are just one of many measures.
.@binance pivoting from reactive compliance to proactive compliance. Stay tuned.
— CZ 🔶 Binance (@cz_binance) August 6, 2021
Earlier the bitcoin exchange announced plans to roll back the ability to trade crypto-derivatives in Europe, starting with Germany, Italy and the Netherlands.
The company reduced the daily withdrawal limit for new users who passed basic account verification, from 2 BTC to 0.06 BTC. Binance also lowered leverage on the futures platform to 20x.
On July 28 the company announced the launch of a new API, allowing clients to track their crypto-asset transactions for tax compliance.
In the last few months, the Bitcoin exchange’s activities have drawn the attention of several regulators. In June the UK’s Financial Conduct Authority barred Binance Markets Limited from any regulated activity in the country without prior written approval.
The Cayman Islands began an inquiry into the exchange’s operations, Thailand and Hong Kong accused the company of operating without a licence, and Japan issued another warning against it.
Polish regulators urged caution when using Binance’s services. Italy and Malta warned consumers about the company’s unregulated activity.
Malaysia’s Securities Commission announced enforcement actions against Binance “for the unlawful management of a digital asset exchange (DAX)”, and Indian authorities are examining the company’s role in a case related to money laundering.
As regulators intensified scrutiny, Zhao published a letter outlining the platform’s plans to protect customers and ensure compliance.
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