Proposed regulations for the blockchain industry in Hong Kong could have far-reaching ramifications for the crypto derivatives market. according to new research by Messari.io.
In a report published on Wednesday, researcher Mira Christanto said so The Hong Kong Special Administrative Region, which happens to be the dominant market for cryptocurrency futures trading, could take action against unregulated exchanges as part of a broader drive for greater governance.
The researcher cited a proposal recently proposed by the Hong Kong Securities and Futures Commission (SFC) that all cryptocurrency companies must comply with anti-money laundering regulations. This is a significant change from last year when the SFC announced that it would only regulate companies in the “values” area.
Previously, the SFC only regulated assets that met the legal definition of securities or futures, a definition that excluded cryptocurrencies.
As Cointelegraph reported earlier this month, The Hong Kong government has proposed that all crypto assets be placed under the supervision of their securities regulator. The regulatory intent appears to be part of a global initiative to curb crypto exchanges, possibly under the guise of money laundering concerns.
As Messari points out, Hong Kong is the most dominant provider in the cryptocurrency futures market. Almost three quarters (72%) of the Ethereum futures (ETH) and 57% of the Bitcoin futures (BTC) come from the Special Administrative Region.
“A lot of people don’t realize the role Hong Kong plays in the global crypto space. Hong Kong is home to some of the largest corporations and dominates the growing futures market. “
Hong Kong has a large presence of crypto exchanges and market service providers including BitMEX, Bitfinex, Crypto.com, and FTX. Exchanges such as OKEx, Huobi and Bybit have regional offices in the semi-autonomous city-state. Big industry players like Tether, Cardano and the EOS publishing house block.one are also based in Hong Kong.
If the new proposal becomes law, companies that continue to operate without a license could face harsh penalties.. There is even the possibility of imprisonment for the executives of the companies that operate these platforms.
As Messari points out, So far, only two cryptocurrency financial services companies have been licensed in Hong Kong.
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