Binance halts derivatives trading in Hong Kong following regulatory warnings

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Binance has shut down derivatives trading for its users in Hong Kong, just a week after taking similar measures in three European countries. The exchange claimed the move was geared towards its compliance efforts and that it was proactive.

Binance has been on the radar of several regulators worldwide in recent months, ranging from the U.K. where its subsidiary Binance Markets was flagged for operating illegally to Japan, where the market regulator issued a warning that it was also operating illegally in the country. Now, the exchange is seeking to get ahead of regulators by “being proactive” in its regulatory approach.

In an announcement on its website, the exchange revealed that Hong Kong users would not be able to open new derivatives products accounts effective immediately. It further gave the users a 90-day grace period to close their open positions. The new restriction will apply to all derivatives products, including futures, options, leveraged tokens and margin products.

The exchange stated, “Binance will be the first major cryptocurrency and digital assets exchange to proactively restrict access to derivatives products to Hong Kong users.”

The ban on derivative products in Hong Kong comes just one week since the exchange took a similar action in three European countries. On July 30, Binance announced that it was winding down its futures and derivatives products in Italy, the Netherlands and Germany. As with Hong Kong, traders in these countries had 90 days to close all their open positions.

The move by Binance in Hong Kong comes two weeks since the city’s regulator issued a statement stating that the exchange wasn’t “licensed or registered to conduct regulated activity in Hong Kong.” The Hong Kong Securities and Futures Commission singled out the stock tokens Binance offers as being of particular concern. These stock tokens, which purportedly represent shares of digital currency-related firms like Coinbase and Tesla, have also raised concerns in other jurisdictions, including Germany.

Changpeng Zhao, who is the founder and CEO of the embattled exchange, cited the ceasing of derivatives in Hong Kong as “one of many proactive measures Binance is taking to help establish crypto compliance best practices worldwide.”

CZ said the digital currency space is becoming more heavily regulated. As a result, Binance will be making a “big pivot from a technology startup into a financial services company.”

Elsewhere, there was more bad tidings for Binance as the CEO of its U.S. subsidiary resigned, barely three months into the job. Brian Brooks claimed that the resignation was because of “differences over strategic direction.”

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.