Binance, the cryptocurrency exchange, has announced the immediate closure of its crypto derivatives offering in Hong Kong.
The announcement comes just a few weeks after the exchange announced the termination of its derivatives offering in Europe. The barrage of announcements comes in the face of growing regulatory scrutiny from nearly a dozen countries regarding the crypto exchange.
Hong Kong customers will be unable to open new derivatives accounts with Binance as of today. Additionally, the exchange stated that beginning on a date to be announced in a subsequent notice, users will be granted 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.”
Previously, the Securities and Futures Commission (SFC) of Hong Kong issued a regulatory warning against Binance on July 16 for operating without a license. Regulators from around the world have expressed concern about Binance and other exchanges’ high-leverage offerings for crypto derivatives products. Binance was well-known for providing some of the highest leverage options available, up to 125X on certain pairs. This is a significant reason why many regulators prohibit crypto exchanges from offering derivatives.
Binance Is Attempting to Improve Its Compliance
Over the last month, the world’s largest cryptocurrency exchange has taken a series of steps to mend fences with regulators. It recently announced a reduction in leverage from more than 100X to 20X for new customers and is working to implement the same reduction for existing derivatives traders. Changpeng Zhao, the exchange’s CEO, previously stated that the company is looking to establish local headquarters in each country where it currently operates.
Binance’s lack of a physical headquarters has also been a source of concern for regulators, who believe it makes it increasingly difficult to take action against the exchange in the event of a complaint or fraudulent activity.
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