Amidst growing regulatory pressure, one of Hong Kong’s largest digital asset exchanges has been forced to deny reports that it has started shutting down client trading accounts for citizens of the US and the Canadian province Quebec.
Hong Kong has been seen as a safe haven for crypto trading but the global regulators reach – to be more specific, the Washington regulators reach – is ever expanding. A report earlier this week, run by the SCMP, claimed BitMEX, which reportedly has leased one of Hong Kong’s most expensive office premises for US$600,000 a month, has started ditching clients from certain countries.
The SCMP says the exchange’s list of restricted jurisdictions has reportedly grown over the past year. BitMEX is said to have told account holders from North Korea, Iran, Syria, Cuba and Sudan in 2018 that they could no longer trade with them and now America and Quebec has reportedly been added to that list, after Canadian financial regulators sent a letter to the exchange last year stating that it was not authorized to provide trading services to citizens of Quebec.
Autorité des marchés financiers (AMF) media relations director told the SCMP: “BitMEX is not registered with the AMF and is therefore not authorized to have activities in the province of Quebec. We informed this company that its activities were illegal.”
The SCMP report also erroneously said that internet addresses from the US are blocked and unless Americans use a virtual private network connection (a VPN) to mask their locations they cannot access the BitMEX website.
At the time of writing, using a VPN with a Chicago IP address, Asia Times could access the site. However, it was faced with a notice that told users that “in accordance with Section 1.4 of our Terms of Service: Persons that are located in or a resident of the United States of America or Québec (Canada) are prohibited from holding positions or entering into contracts at BitMEX.”
The BitMEX message also stated that it “reserves the right to immediately close the accounts and to liquidate the open positions of persons determined to have breached our Terms of Service.”
According to industry news site Cointelegraph, BitMEX is now claiming there were “as many as six major mistakes” in the SCMP report and went on to deny it was banning its North American users.
What is certainly true is Washington’s Securities and Exchange Commission has become increasingly aggressive towards digital currency exchanges that it does not approve of, whether they are in the US or not. Last year a number of fines were dished out to unregulated exchanges which observers claim accelerated the big bear market for digital currencies.
According to Coinmarketcap.com, BitMEX trade volume is more than US$900 million per day. Heavily leveraged Bitcoin contracts are extremely popular on the BitMEX exchange and on several other Asian exchanges and is a product that the SEC does not approve of lightly.
The ongoing government shutdown in the US has delayed the approval process for many crypto companies eager to get their own futures products on the table. NYSE-owned Bakkt is the biggest example as the prolonged chain dragging from US regulators continues to damage the embryonic crypto industry.