Major crypto exchanges like Coinbase are exploring a number of development plans overseas as a result of mounting difficulties at home, particularly in light of the SEC’s most recent assault.
Last week, the US regulator cracked the whip on the New York-based crypto exchange alleging that the firm was functioning as an unregistered broker and exchange.
Coinbase was already involved in a staking battle with the SEC after the commission claimed that its staking products did not qualify as securities.
Amidst this crackdown, a Hong Kong legislator invited the crypto exchange, to come and register in the region.
Moving to Hong Kong seems like a better option because apart from being considered Asia’s emerging crypto hub, the Securities and Futures Commission [SFC] of HK started accepting applications for licenses for crypto trading platforms on June 1.
But according to Leo Weese, co-founder of the Bitcoin Association of HK, these prospects look good only on paper.
Weese claimed that in practice, Hong Kong’s regulations aren’t particularly alluring to cryptocurrency exchanges.
First off, fewer tokens will actually be accessible for trading than what users would anticipate from reputable exchanges.
Secondly, Hong Kong’s securities watchdog the Securities and Futures Commission has many stringent rules such as a mandatory 12-month cooling period between token launch and listing.
Stablecoins, cryptocurrency derivatives, earn or lending schemes, and perhaps staking services are also prohibited in addition to airdrops.
Coinbase won’t be immune in HK due to its past
Speaking in an interview Weese said, “Hong Kong’s framework as it exists today is highly unattractive. The market is small and unproven, banking partnerships are non-existent, and products are highly restricted.”
He also explained that Asian markets are “fundamentally different” from their Western equivalents and that Coinbase would not necessarily succeed in HK even if they were prepared to give up their current clientele.
Moreover, Weese noted that shifting to Hong Kong won’t immediately protect the exchange from either SEC oversight or US regulations.
He then gave the instances of BitMex and Binance, who had ties to Hong Kong in the past but are now stuck by US regulatory standards.