- OTC trading is trading directly between two entities, without the intervention of an exchange
- Prior to the FTX bankruptcy, Genesis Block had been winding down its business in Hong Kong
Genesis Block, a leading crypto services company based in Hong Kong, announced it was ceasing over-the-counter (OTC) trading services in the wake of contamination risks from FTX, which filed for Chapter 11 bankruptcy, Reuters reported.
Company is not accepting new customers
OTC trading is trading directly between two entities, without the intervention of an exchange. The company also announced it’s not accepting new users and has asked existing ones to withdraw their funds. Genesis Block was the biggest bitcoin ATM operator in Asia at one time.
Company CEO Wincent Hung told Reuters:
We have ceased trading, as we don’t know which counterparties would fail next, so we would rather close out all our positions to regain some of our liquidity.
An official from Genesis Block resigned from the position of director in FTX Hong Kong this month. FTX Hong Kong was among 130 companies affiliated with FTX.
Genesis closing Hong Kong business?
Even prior to the headline-grabbing bankruptcy, Genesis Block had been winding down its business in Hong Kong, insiders reported. They severed ties with FTX earlier this month. The company’s website still has a guide to how to buy FTT, FTX’s native token, via Genesis’ ATM network. Genesis has 29 ATM locations in Hong Kong and six in Taiwan.
Currently, a company called CoinHero operates the ATMs. This brand is expanding its operations in Hong Kong after Genesis sold the business to a third party in 2021, insiders reported.
Challenges in investor protection
Genesis Block’s suspension of services in Hong Kong, which is widely considered one of the crypto-readiest cities in the world by the number of ATMs per capita, draws attention to the problems with ensuring investor protection in the highly connected crypto industry, worth $900 billion.
You can trade bitcoin, dogecoin, and tether easily at trading desks and ATMs in Hong Kong’s Causeway Bay shopping area.
Regulators might allow retail trade of digital assets
Hong Kong’s Securities and Futures Commission (SFC) is in talks with the industry on its proposal to permit retail digital asset trading. The regulator hopes this will enhance Hong Kong’s status as a fintech center.
If this is allowed, it would represent a considerable relaxation of the city’s digital asset services regime in terms of issuing licenses. The regime is expected to take effect in March next year. Initially, the regulator had proposed to limit trading to professional investors.
