Reading: Hong Kong Traders Prefer Regulated US Markets for Bitcoin Futures

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Hong Kong Traders Prefer Regulated US Markets for Bitcoin Futures

Adam James · @Shasdam | Feb 12, 2018 | 18:30

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Hong Kong Traders Prefer Regulated US Markets for Bitcoin Futures

Adam James · @Shasdam | Feb 12, 2018 | 18:30


Bitcoin futures traders in Hong Kong are turning away from the autonomous territory’s unregulated cryptocurrency exchanges, flocking instead to regulated US markets.


Safety First

December saw the launch of Bitcoin futures on both the CBOE and CME. Since then, trading volume has steadily increased as traders in Hong Kong turn their backs on their less secure domestic exchanges in favor of regulated US markets.

TD Ameritrade CEO Gary Leung claims his is one such firm experiencing increased interest in Bitcoin futures coming out of Hong Kong, explaining to the South China Morning Post:

We have received a lot of inquiries about Bitcoin futures since we started operating in Hong Kong last October, when the prices were surging.

TD Ameritrade

This newfound interest in American exchanges for Bitcoin futures stems largely from the fact that the Hong Kong Monetary Authority views the cryptocurrency as a commodity, and thus does not regulate it.

Benny Mau, managing director at China Securities International Finance Holdings, explained to the South China Morning Post:

Bitcoin and other digital currencies are basically not regulated in Hong Kong because they are traded like commodities. If the digital currency platforms have a problem or are hacked, the investors may suffer losses because the regulators might not do anything for them. This has discouraged many Hong Kong investors from trading digital currencies in Hong Kong.

Instead, Hong Kong investors looking to make the safest trades possible are utilizing US exchanges, since “investors do not need to think about the counterparty risk or worry about the platforms having a problem.”

CBOE Announces Increased Bitcoin Futures Margins Amid Market Manipulation Worries

According to Gary Cheung, chairman of the Hong Kong Stockbrokers Association, Bitcoin futures trading in the US isn’t limited to a specific subset of Hong Kong traders. Rather, there are two types of Hong Kong investors who trade Bitcoin futures in America:

There are bitcoin miners and other investors who trade bitcoin and want to use the futures products to hedge. The others are normal futures investors who purely want to take profit created by speculative futures trading.

Both types of investors have thus far made it abundantly clear — when it comes to investing in Bitcoin futures, regulation is seen as significantly more attractive than unregulated markets.

What are your thoughts on Bitcoin futures trading on American markets? Let us know in the comments below!


Images courtesy of Bitcoinist archives.


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