The Hong Kong-based crypto exchange Hashkey HK has recently opened trading for Avalanche (AVAX), but with a peculiar condition. Only professional investors with a hefty portfolio exceeding $1 million can trade AVAX on the exchange, as stated in the company’s September 27 announcement.
According to the Special Administrative Region’s (SAR) Securities & Futures Commission (SFC), AVAX joins the club of digital assets including BTC, Ether (ETH), and Tether (USDT) that are permitted for trading among investors meeting their defined criteria.
Unlike its international rivals, Hashkey HK mandates its users drop the equivalent of $1,500 into their exchange accounts under the Know Your Customer verification process. Mandates aside, it is important to note that the exchange has an estimated 24-hour trading volume of merely $5.3 million.
Despite putting in over $25 million to establish the necessary infrastructure for obtaining the Virtual Asset Provider (VASP) license in Hong Kong, the regulated crypto trading space still suffers from malpractices.
Perhaps the best example is the JPEX crypto exchange saga that unfolded at the Token2049 conference. JPEX, accused of embezzling more than $178 million of investors’ money, was the biggest financial fraud in Hong Kong’s history. It is noteworthy that this exchange was unregistered with the SFC at the time of the incident.
To counter such fraudulent activities, the SFC actively publishes a portfolio of crypto exchanges deemed non-compliant within SAR.
Hong Kong’s approach to crypto regulation and trading is an extreme picture of caution and constraint, particularly with its prohibitory portfolio requirements and intense regulatory measures. A stark contrast from other global powerhouses, where the crypto market sees much more accessibility and trading freedom.
That said, their caution has not necessarily pre-empted scam incidents, resulting in a significant blow to investor trust in these regulatory practices.
In short, Hong Kong’s ground rules for digital asset trading could, on the one hand, deter market manipulation by gating entry only to professional investors. Yet, on the other, they could limit market accessibility in the name of regulation, ultimately hindering the broader mass adoption and potential of blockchain technology.
Source: Cointelegraph
