In the emerging crypto markets, the Hong Kong investors are turning to the US market for trading bitcoin futures. However, they believe that trading on Hong Kong’s unregulated cryptocurrency exchanges is safest.
Hong Kong investors are turning to Bitcoin future because they are safer than the unregulated Bitcoins in the cryptocurrency markets. This includes Bitcoin miners who trade both Bitcoins and those who buy the futures purely according to Gary Cheung, chairman of the Hong Kong Stockbrokers Association.
He said Hong Kong’s city futures brokers witnessed an increase in trade on the U.S. market. However, the current appetite for the product is an only short-term and is mainly due to decreasing Bitcoin prices.
According to Jasper Lo Cho-yan, a senior vice-president at Haitong International,
“When bitcoin futures were launch last December, the bitcoin price was rising, and everyone was optimistic. Now the price has tumbled, and speculators may be finding it harder to make money”.
Regulation of Bitcoin by many governments may also affect the futures according to him.
Apart from the falling Bitcoin prices, the Hong Kong investors sees increased risks on the part of investors trading Bitcoins because Bitcoin is unregulated. Investors would lose savings and assets in case of a hack, for instance, and the regulators might do nothing for them.
Benny Mau, managing director at China Securities International Finance Holdings, said,
“Instead, they’re trading them (futures) on the US exchanges, which are regulating. The futures prices may go up and down substantially, but investors do not need to think about the counterparty risk or worry about the platforms having a problem.”
Hong Kong treats as security, Bitcoin-related services, and products that are structured as securities or futures products.
TD Ameritrade is one of the companies that has seen an increase in Bitcoin futures customers based in Hong Kong. The firm has received a lot of inquiries from these investors since launching in Hong Kong in October last year as Bitcoin prices went up. This is according to Gary Leung, a chief executive officer of TD Ameritrade.
However, the company requires Hong Kong customers who want to trade Bitcoin futures. Thus, to have a minimum deposit of US$25,000 in the account and experience in futures trading.
“This is because the product has a very high level of risk and its underlying asset is so volatile,” Leung said.
Cboe and CME Bitcoin futures had increased in trading volume since their launch in December last year. Cboe, for instance, saw the volume increase from 7,162 in January to 10,296 contracts in February. While CME attracted an increase of 1,592 to 1,978 contracts over the same period.
Bitcoin is not regulating in Hong Kong as it is consider as a commodity. Unless if the any services and products as securities or futures products.