After Europe, Binance is now shutting down derivatives trading for users in Hong Kong as the world’s largest cryptocurrency exchange adopts a more proactive approach to regulatory compliance, CEO Changpeng Zhao has announced.
Binance Shuts Derivatives Trading In Hong Kong
Today, Binance has revealed that customers in Hong Kong will no longer be allowed to open new derivatives trading accounts with immediate effect. Additionally, effective from a date that will be announced later, Hong Kong users will have 90 days to close their open positions.
“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.”
The announcement further indicated that Binance will basically become the first major cryptocurrency exchange to “proactively restrict access to derivatives products to Hong Kong users”. In a tweet on Friday, Zhao said the company was changing its regulatory compliance strategy from reactive to proactive.
This is not the first time Binance has pulled the plug on its derivatives products. Just last week, the global exchange announced that it was halting crypto futures and derivatives for the European market. At the time, Binance posited the shutdown would commence in Germany, Italy, and the Netherlands before moving to other European countries.
Binance Is Working To Become More Compliant
Binance has had to make sweeping changes in response to mounting regulatory pressure in recent weeks. Hong Kong’s Securities and Futures Commission (SFC) announced last month that the exchange was not registered to conduct any activity in Hong Kong. This was followed by Binance removing tokenized stock tokens from its website.
Moreover, regulatory bodies in several other countries around the world have issued warnings and notices that Binance is not authorized to carry out any business within their jurisdictions. In response, the exchange reduced the maximum futures trading leverage from 100x to 20x as well as the daily withdrawal limits for unverified users.
The Binance chief addressed these new changes in an open letter where he suggested that the crypto industry was blossoming but the regulatory framework is not well defined. According to him, compliance is a journey and his company is ready and willing to cooperate with regulators.
Binance is looking to open physical headquarters in several countries, after years of operating in a decentralized manner. Zhao is also not opposed to the idea of welcoming a new Binance CEO with more regulatory experience.
By shifting to a proactive stance, the exchange is hoping to appease regulatory officials.