The world’s leading market for cryptomone futures could face strong regulatory pressure

Hong Kong appears to be strengthening regulations on cryptomoney exchanges.

Proposed regulations targeting Hong Kong’s blockchain industry could have far-reaching consequences for the crypto-derivatives market, according to new research by

In a report released Wednesday, researcher Mira Christanto said the Hong Kong Special Administrative Region, which happens to be the dominant market for crypto currency futures trading, could be cracking down on unregulated exchanges as part of a broader push for greater governance.

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The researcher cited a recent proposal by the Hong Kong Securities and Futures Commission, or SFC, that would require all cryptosecurity companies to be subject to anti-money laundering rules. This is a significant change Bitcoin Compass from only one year ago, when SFC announced that it would only regulate companies in the „securities“ space.

Previously, SFC only regulated assets that met the legal definition of securities or futures, a definition that excluded crypto-currencies.

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As Cointelegraph reported earlier this month, the Hong Kong government has proposed to bring all cryptoactives under the supervision of its securities regulator. The regulatory intention appears to be part of a global initiative to curb cryptoexchanges, possibly under the guise of money laundering concerns.

As Messari points out, Hong Kong is the most dominant player in the cryptomoney futures market. Almost three quarters (72%) of Ethereum futures (ETH) and 57% of Bitcoin futures (BTC) come from the Special Administrative Region.

Christanto said:

„Many people do not realise the role Hong Kong plays in global crypto space. Hong Kong is home to some of the largest companies and dominates the growing futures market“.
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Hong Kong is home to a large presence of cryptoexchanges and market services companies, including BitMEX, Bitfinex, and FTX. Exchanges such as OKEx, Huobi and Bybit maintain regional offices in the semi-autonomous city-state. Major industry players such as Tether, Cardano and EOS publisher are also located in Hong Kong.

If the new proposal becomes law, companies that continue to operate without a license could face severe penalties. There is even the possibility of prison sentences for the executives of companies operating these platforms.

As Messari notes, to date, only two crypto-currency financial services companies have been licensed in Hong Kong.