By
Chimamanda U. Martha
April 25th, 2024
Binance has expanded its crypto derivatives shutdown net to include Hong Kong, after stopping trading in Germany, Italy, and the Netherlands.
On Friday, Binance Holdings Ltd said new users in Hong Kong will no longer be able to trade derivatives products. Also, existing users of the platform will have 90 days to close any open positions in futures, options, margin products, and leveraged tokens. The online trading platform however says it is yet to decide when the stipulations for the latter category of users will take effect. This announcement comes a week after the leading crypto exchange shut down its derivatives offerings in Germany, Italy, and the Netherlands. These are all part of compliance measures Binance is taking to reshape its image in the face of bad publicity and scrutiny from several countries. It is the first major crypto exchange platform to take such a decision in Hong Kong.
Hong Kong Government and Compliance Measure Before Binance Derivatives Shutdown
Last month, the Hong Kong Securities and Futures Commission intensified its crypto trading oversight. The Commission now requires all platforms – including Binance – to come under local regulation which includes anti-money laundering screenings. It also expects to impose counter-terrorism financing rules in a bid to improve the overall outlook of trading activities. The Hong Kong government announced in May that these proposed stipulations will only serve professional investors not retail investors.
Regulators in the US, the UK, Malaysia, and Thailand are also worried about the anti-laundering standards at crypto exchanges. They point out the risks unregulated crypto trading poses to consumers and are calling for improved compliance laws. It is in light of this that Binance discontinued its global stock tokens offering in such nations as well. Other countries to take action against the online exchange include Japan, Poland, and the Cayman Islands.
Binance, the world’s largest crypto platform in trading volume, plans to step up its compliance in the face of this scrutiny. In a July press conference, the platform announced plans to adopt the mindset of a financial institution as opposed to a tech startup. It believes this is highly necessary for it to continue to thrive in a “relatively heavily regulated” crypto space. Requisite actions include applying for all the necessary licenses and compliance procedures, according to company CEO Changpeng “CZ” Zhao.
Other Binance Improvements in the Face of Bad Publicity
The exchange tightened withdrawal limits from 2 Bitcoin to 0.06 Bitcoin, approximately $2000. The restriction affects on customers with only basic account verification information as part of a broader KYC scheme. However, affected customers may increase the daily withdrawal maximum to 100 Bitcoin after providing more information, including ID documents. Also, facial verification and proof of address round off the completion exercise. Binance also unveiled a new tax reporting tool that allows customers to track crypto transactions and transfer such for tax reporting.
Zhao recently revealed that Binance is looking to set up physical headquarters in multiple jurisdictions. He is also open to the emergence of a new company CEO with a “very strong regulatory background”. Zhao believes having a successor with this skill set will aid the platform as it continues to reshape and adapt.
Binance was founded in 2017 and is currently domiciled in the Cayman Islands.