Binance to halt futures accounts in Hong Kong following regulatory warnings

Four-year-old start-up said in July it wants to become a ‘financial institution’
Hong Kong’s Securities and Futures Commission issued warning in July about Binance

Banking & finance

Chad Bray

Published: 8:00pm, 6 Aug 2021

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Binance, the world’s largest cryptocurrency exchange, said on Friday that it would no longer allow new users to open futures accounts in Hong Kong after regulators in the city issued a warning about its services last month.

Existing users in Hong Kong would have a 90-day period to close their positions, Binance said. After that, no new positions can be opened, the company said.

“As the market leader, Binance constantly evaluates its product and service offerings,” the company said in an announcement 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.”

The Securities and Futures Commission (SFC) issued a warning in July stating that Binance was not licensed or registered to offer securities, which is a regulated activity in the city. The SFC was referring to Binance tokens based on stocks such as Apple and Tesla, which were being marketed to investors in Hong Kong, as reported by the Post in April. Binance took down the business the same day.

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Is cryptocurrency too risky for China?

Binance said it was the first major cryptocurrency and digital assets exchange to proactively restrict access to derivatives products in the city.

Hong Kong regulators said in May that they planned to require cryptocurrency exchanges to be licensed and only offer services to professional investors, with providers subject to anti-money-laundering and counterterrorism financing requirements.

Last month, Binance said it was seeking licences and to open multiple headquarters around the world after it faced a slew of regulatory warnings from the United States to the United Kingdom to Hong Kong.

Zhao Changpen, the four-year-old start-up’s CEO, said it wanted to be a “financial institution” at a press conference in July. The company operates in more than 180 countries and claims an average daily trading volume of US$2 billion.

The UK’s Financial Conduct Authority banned its Binance Markets unit in June, ordering the business to make clear on its website and social media channels that it was no longer permitted to operate in the country. Binance Markets is a separate legal entity from Binance.

Binance previously said it does not maintain an exchange operation in Hong Kong and has applied for a licence in Singapore.

As part of Hong Kong’s current opt-in licensing framework, an exchange must offer at least one security token on its platform, which Binance has said it has discontinued. Exchanges in the city are also banned from offering leverage to customers.

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