stub Centralized Exchanges Look with Favor on Asia's Friendly Regulatory Scene – Bitget, OKX, Gemini and Paxful -
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Centralized Exchanges Look with Favor on Asia’s Friendly Regulatory Scene – Bitget, OKX, Gemini and Paxful

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Bitget Managing Director Gracy Chen at Foresight 2023. Source: Bitget/Twitter

The intensified regulatory crackdown within the US digital assets sector so far this year has compelled crypto firms, including exchanges, to mull relocation to welcoming and less hostile jurisdictions. Though in justification, market regulators have alluded to the need to protect consumers; industry experts opine that the enforcement action approach could stifle innovation in the space and scare away potential investors.

The latter criticism has been energized by substantive reports of positive developments in other regions where domestic authorities have adopted less antagonistic measures. Even more recent propitious events in Hong Kong, Singapore, and other Asian jurisdictions have made companies exiting (or planning to) the US give a second look to overseas options.

Bitget announces $100 million fund to support Web3 projects, focus on Asia startups

In a Monday statement, crypto derivatives exchange Bitget announced a self-funded nest egg with an initial funding of $100 million. The fund will support Web3 and crypto projects globally but with a bias toward those in Asia. Bitget Managing Director Gracy Chen cited the rapid evolution of Web3, which could become a truly global phenomenon' as the rationale backing the fund. The announcement comes barely a month since the exchange shared news of acquiring a controlling stake in BitKeep after injecting $30 million into the decentralized multi-chain wallet offering.

The exchange's statement of the launch said that several venture capital firms, including Foresight Ventures and Dragonfly Capital, had reached out for partnerships on the same. The latter crypto-focused VC fund announced separately last week a $10 million strategic investment in Bitget to support its market and service expansion. The exchange's token offering Bitget (BGB) climbed on the news, emerging as one of the best performers of the week. Bitget's announcement comes days before the Hong Kong Web3 festival between Apr 12 to Apr 15. Earlier this year, the Seychelles-based crypto exchange revealed plans to hire more employees at a time when many companies in the industry were trimming their teams.

Promoting Asia’s Web3 ecosystem

The self-funded chest is part of the exchange's “Go beyond derivative” vision for this year and will favor Web3 startups in Asian countries. In addition to the Web3 initiative, the copy trading platform intends to expand its launchpad and Bitget Earn products. Through the fund, Bitget hopes to bridge the gap between the worlds of DeFi and CeFi in a “reliable, convenient, and secure” fashion. Chen added that the exchange would adopt “a fully conscious and responsible approach” to build a trustworthy link in the space.

“Hong Kong Chief Executive Li Jiachao and the Office of the Central Government in Hong Kong will attend the ceremony of the Web3.0 Association held at the Hong Kong Stock Exchange today to show the support of the Beijing and HK government,” Wu Blockchain reported earlier today.

The perception of Asia being favorable for setting up crypto businesses follows reports of Hong Kong officials actively working to introduce a licensing regime for crypto exchanges from June this year. Flexible regulations have also enabled entrant firms to onboard local users.  East Asian countries have recognized and sought to largely promote the digital assets industry. Last week, Japan approved a whitepaper outlining feasible recommendations to advance the crypto niche domestically.

OKX hails expansion into Australia as an indispensable part of its growth strategy

OKX, another Seychelles-based crypto exchange, revealed last week plans to launch an office in Australia in the coming months. The exchange executives expressed conviction that expanding its crypto services to the Australian market positions it strategically to take advantage of the new crypto adoption wave. OKX noted that Australia plays a vital role in its growth strategy and views it as an essential market for expansion, given that its local market is already on the path of widespread crypto adoption.

OKX Chief Marketing Officer Aider Rafique said the decision to broaden its market reach into Australia was also justified by the growing demand for crypto investment and trading products there. In addition to the huge appetite, Rafique is confident in the crypto education levels of Australians and is optimistic that it will ease OKX's venture into the market. Firms operating trading platforms must register with the Australian Transaction Reports and Analysis Centre (AUSTRAC) to offer cryptocurrency services in the country. OKX still needs to complete this necessary licensing process.

Gemini seeks to debut a derivatives trading platform for international clients

Towards the end of last month, US-based exchange and custody platform Gemini disclosed plans to launch an international crypto derivatives exchange. News outlet The Information reported that according to two individuals familiar with the matter, Gemini is gearing up to introduce perpetual futures products that would cater to international clientele, consistent with the trend of increasing exchange shifting focus to the derivatives market in the post-FTX environment.

The exchange, founded by the Winklevoss brothers, will allow Gemini users to trade perpetual futures contracts, which are considered to be high-risk products and cannot be offered to retail traders in the US. Worth noting, Binance and its CEO Changpeng Zhao are being pursued in the US over allegations of this very violation. Last Monday, the Commodity Futures Trading Commission (CFTC) claimed that Zhao and his exchange ran an ineffective compliance program and disregarded federal laws to gain revenue from offering US customers derivatives products.

Bloomberg reported this week that the Winklevoss twins funded the Gemini crypto platform with $100 million to back the exchange's operation amid the winter cycle. The Bloomberg post, which cited two unnamed people in the know, indicated that the exchange cofounders tried to secure outside investment before resolving to the loan option. In February, Gemini agreed to settle with customers of its Earn yield product as part of the Genesis bankruptcy case using a $100 million package. The cofounders said they would allocate the funds in accordance with the arrangement it struck with creditors.

HTX to bolster its Web3 ecosystem and integrate Gala L1

Bitget isn’t the only cryptocurrency exchange making strides into Web3. HTX announced on Friday that it reached an agreement with blockchain-based gaming platform Gala Games in a strategic partnership to see the duo collaborate on gaming in Web3. They will invest in and list projects within the Gala ecosystem. The arrangement will expedite technological growth, with the Gala layer-1 blockchain integration expected to elevate HTX’s on-chain capabilities. Developers who leverage the Gala ecosystem for GameFi and NFT projects can use the assets provided by the Gala ecosystem to implement the appropriate Web3 infrastructure.

Players can buy and trade virtual in-game items like physical assets. Unlike on most gaming platforms, these assets can only be tampered with or removed by developers if authorized by the player.  President of Blockchain at Gala Games Jason Brink emphasized the crucial role of partnering with mainstream exchanges like HTX to enable wide-scale adoption, adding that the partnership empowers developers to create solutions aligned with Gala’s vision. The Gala brand has worked with various entertainment and music entities, including AMC, NBCU and DreamWorks studios.

OPNX, the exchange backed by CoinFLEX executives and the co-founders of 3AC, begins trading

The co-founders of defunct Singapore-based hedge fund Three Arrows Capital, Kyle Davies and Zhu Su, debuted their new crypto trading platform, Open Exchange (OPNX), alongside a FLEX token giveaway for the community. While their former creation failed and filed for bankruptcy last July, the duo has seemingly moved on to a new enterprise. OPNX was first announced in January as a marketplace where users (barring those in the US and 22 other jurisdictions) can trade crypto claims and derivatives. At the time, Zhu defined it as a chance to take all the pain and build something to advance crypto, though in hindsight, this was a chance to capitalize on the crypto trading appetite of claims holders.

OPNX CEO Leslie Lamb, the spouse to CoinFLEX CEO Mark Lamb, said in a tweet last Tuesday that the exchange will give an option to the more than 20 million claimants worldwide who have to wait for years before they can exit their funds, including creditors of Celsius, FTX, and the likes. Currently, the exchange provides spot and futures trading services for major assets, including Bitcoin, DOGE, and USDC, with claims trading expected to go live in the upcoming weeks. The FLEX token of CoinFLEX, which rebranded as OPNX  last month, will function as the native token for the OPNX platform.

We're thrilled to announce a significant increase in trading volume at OPNX! On day 1, our volume was a hard-fought $13.64. Today on day 5, it has surged to a magnificent $12,398. That's a remarkable percentage increase of over 90,000%. We are incredibly proud of our team's hard work and dedication,OPNX wrote in an Apr 10 tweet.

Traders who use FLEX will receive discounts of up to 50% on trading fees, with 20% of the revenue generated from fees set to be burned. This could boost the value of FLEX tokens if the OPNX platform gains traction and demand while the supply of FLEX tokens gradually heads down. FLEX had a market capitalization of $170 million and a depressed trading volume of $955,066 in the last 24 hours at the time of writing.

Singapore High Court approved the restructuring efforts of bankrupt crypto exchange Zipmex

Southeast Asia-focused crypto exchange Zipmex filed for bankruptcy protection in Singapore last July, citing an overall downturn of the digital assets market in the environment that followed the Terra breakdown. In an update sent last Thursday, the exchange said the Singapore High Court granted numerous a set of proposals, a vital step towards the affected customers recovering funds they held with the platform.

The Singapore Court gave the green light to create an ‘Administrative Convenience Class,’ a category for creditors with up to USD 5,000 worth of assets in the Z Wallet. The Zipmex Group also received approval on the proposal to extend creditor protection for a further three weeks, now expected to last until April 23. Zipmex is obligated to furnish the court and the exchange's creditors with a report regarding its restructuring proceedings by April 13.

Bittrex exits US market after nine years, blames uneven regulatory and economic landscape

Last week, Bittrex exchange, a former leader in the US market space, communicated that it is exiting the jurisdiction next month. The exchange said the US government is to blame for its decision to leave after nine years of operating there. In a statement to users, CEO Ritchie Lai explained that Bittrex could not continue operations in the current regulatory and economic climate where regulatory requirements are vague and enforced unfairly, resulting in an uneven playing field for market competitors.

Nevertheless, Bittrex assured its customers that funds remain safe, and trading will run until April 14, with a requirement to complete withdrawals by April 30 enforced. Further, the change did not affect Bittrex Global, which serves the non-US clientele. While regulatory problems may have influenced the exchange's departure from the country, Block's research director Steven Zheng believes there were other factors. He explained that Bittrex’s diminished trading volume in the US (which fell below 1% in 2021) is insufficient to justify the effort and resources required to continue operating.

Paxful halts operations, citing regulatory reasons and key staff departures

Leading peer-to-peer Bitcoin marketplace, Paxful also told users last week that it was suspending operations owing to key staff departures and regulatory challenges, most notably in the US. CEO and co-founder Ray Youssef told users that Paxful is taking the time to reorganize and navigate this harsh environment. He assured users that all funds remain safe but did not guarantee that the marketplace would return to operations. In a Twitter Space that came after the announcement, Youssef said that Paxful has always been keen on compliance, but seemingly its efforts have not been enough for the regulator in the US.

He acknowledged that regulators had made progress, but they still don’t get it and grow more suspicious by the day. Particularly, Youssef cited Paxful's use of gift cards to attract and onboard the unbanked in Africa as an instance of the activities that attracted regulatory scrutiny in the United States. Beyond regulatory and staffing challenges, Youssef said Paxful's closure was partly due to a lawsuit filed by a co-founder expelled from the company over a year ago. While the CEO did not tag a name, he likely referred to Artur Schaback, who named Youssef and Jude Chidi Ogene, who served Paxful as legal counsel until March this year, as defendants in a suit against Paxful.

Sam is a financial content specialist with a keen interest in the blockchain space. He has worked with several firms and media outlets in the Finance and Cybersecurity fields.