24 March 2019
BitMEX differentiates itself from other cryptocurrency trading platforms by offering derivatives trading. Photo: Reuters
BitMEX differentiates itself from other cryptocurrency trading platforms by offering derivatives trading. Photo: Reuters

Bitcoin trading platform BitMEX is SFC’s new neighbor in Central

Rental cost of Grade A offices in Central has soared in recent years, forcing many investment banks to move their offices to Quarry Bay, Wong Chuk Hang and even Kowloon.

However, it’s rumored that cryptocurrency trading platform BitMEX has taken more than 10,000 square feet at Cheung Kong Centre for a record price of HK$203 per square foot.

The office is said to be on the 45th floor of the building, with a total area of 12,783 square feet. Barclays Capital was the last tenant.

Currently, office rent at Cheung Kong Centre stands at HK$168 to HK$175 psf. If the rumor is true, BitMEX paid up to a 20 percent premium.

New tenants are usually required to pay three months of rent as deposit for Grade A offices. But BitMEX is said to have agreed to pay one year of rentals upfront, amounting to HK$31.2 million, demonstrating its commitment.

The two founders of BitMEX, chief executive Arthur Hayes and chief technology officer Samuel Reed, started their careers in Hong Kong, in investment banking and information technology respectively.

Hayes has worked as a derivatives trader at Deutsche Bank and Citi in Hong Kong, after graduating from the Wharton School of Business. Reed worked as CTO in two startups, Tixelated and Global Brand Solutions, after graduating from Washington & Lee.

The derivatives trading platform is operating under parent company HDR Global Trading, which is domiciled in Republic of Seychelles, an eastern African nation with a population of 90,000.

In fact, legal and taxation considerations often determine where cryptocurrency trading platforms choose to incorporate.

Many such trading platforms only allow customers to buy and sell cryptocurrencies. BitMEX differentiates itself by offering derivatives trading.

It has launched a dozen of futures and swaps products for bitcoin, ethereum, litecoin, ripple and four other cryptocurrencies.

Clients can trade these cryptocurrencies on a margin of just 1 percent.

Cryptocurrencies are by nature volatile; derivatives of cryptocurrencies are thus highly speculative products.

BitMEX’s daily trading volume hit US$105.1 billion in the last 30 days, ranking number one, according to CoinMarketCap. That exceeds BitForex’s US$60.7 billion, Binance’s US$30.8 billion, and OKEx’s US$28.7 billion.

These platforms usually collect 0.1 percent commission fee. That means BitMEX might be generating a monthly revenue of US$100 million. No wonder they don’t mind paying a bit more for their office.

Interestingly, the offices of the Securities and Futures Commission, Hong Kong’s securities regulator, are on the 30th, 33rd and 35th floors of Cheung Kong Centre.

Would that imply that BitMEX is not worried about regulatory issues at all?

This article appeared in the Hong Kong Economic Journal on Aug 14

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist

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