Proposed regulations targeting Hong Kong's blockchain industry could have far-reaching consequences for the crypto derivatives market place, according to new research from Messari.io.

In a report published on Wednesday, researcher Mira Christanto said the Special Administrative Region of Hong Kong, which happens to be the dominant market for crypto futures trading, could exist clamping down on unregulated exchanges as part of a broader push button for more governance.

The researcher cited a recent proposal from the Hong Kong Securities and Futures Committee, or SFC, that would require all crypto businesses to autumn under anti-money laundering rules. This is a significant departure from just 1 year ago when the SFC announced it would only regulate companies in the 'securities' space.

Previously, the SFC only regulated assets that meet the legal definition of securities or futures -- a definition that excluded cryptocurrencies.

As Cointelegraph reported earlier this month, the Hong Kong government has proposed to bring all cryptoassets under the oversight of its securities regulator. The regulatory push appears to be part of a worldwide initiative to rein in cryptocurrency exchanges, possibly nether the guise of money laundering concerns.

Equally Messari notes, Hong Kong just so happens to be the most dominant player in the crypto futures marketplace. Most three-quarters (72%) of Ethereum (ETH) futures and 57% of Bitcoin (BTC) futures come up from the Special Authoritative Region.

Hong Kong'south crypto futures marketplace by Messari.io

Christanto said:

"Many people don't realize the role Hong Kong plays in the global cryptocurrency space. Hong Kong is home to some of the largest enterprises and dominates the growing futures market."

Hong Kong host a large presence of cryptocurrency exchanges and marketplace services companies, including BitMEX, Bitfinex, Crypto.com and FTX. Exchanges like OKEx, Huobi and Bybit maintain regional offices in the semi-autonomous city-state. Large industry players like Tether, Cardano and EOS publisher block.one are also situated in Hong Kong.

If the new proposal passes into law, enterprises that continue to operate without a license could face up stiff penalties. At that place is even the possibility of prison sentences for company executives who run these platforms.

Every bit Messari notes, to date, only two crypto financial services companies have obtained licenses in Hong Kong.