Hong Kong-based crypto exchange Hashkey has announced the addition of Avalanche (AVAX) trading to its platform. However, this new offering comes with a significant restriction.

As per the announcement made on September 27, only professional investors are eligible to trade AVAX on the Hashkey exchange. Professional investors are defined by the Securities & Futures Commission (SFC) of the Special Administrative Region (SAR) of Hong Kong as individuals with an investment portfolio exceeding 8 million Hong Kong dollars, which is approximately $1 million.

Limited Retail Crypto Trading

The SFC has imposed strict restrictions on crypto exchanges in Hong Kong since the introduction of regulated retail crypto trading in August. Currently, the SFC permits retail trading of Bitcoin, Ether, and Tether, while other altcoins are subject to professional investor restrictions.

Hashkey Hong Kong requires users to deposit an equivalent of $1,500 into their exchange accounts as part of the Know Your Customer (KYC) verification process. This KYC requirement is distinct from many global counterparts and adds an extra layer of security to the exchange’s operations.

Challenges in the Regulated Crypto Space

Crypto exchanges in Hong Kong have invested over $25 million to establish the necessary infrastructure for obtaining a Hong Kong Virtual Asset Provider (VASP) license. Despite these efforts, Hashkey Hong Kong’s 24-hour trading volume remains relatively low at $5.3 million across just three cryptocurrencies, a fraction of its global counterparts.

Challenges with Regulatory Compliance

Interestingly, the introduction of a regulated crypto regime in Hong Kong has not entirely curbed illicit activities in the space. During the Token2049 conference in September, the largest financial fraud in the SAR’s history unfolded with the collapse of the JPEX crypto exchange. JPEX was accused of embezzling over $178 million of investors’ funds and was unregistered with the SFC at the time of the incident. In response, the SFC began publishing a warning list of non-compliant crypto exchanges operating in Hong Kong.

The regulatory landscape for crypto exchanges in Hong Kong continues to evolve as authorities seek to strike a balance between facilitating innovation and protecting investors.