Hong Kong officially bans all unauthorized crypto exchanges, that is, without a license. This regulatory measure highlights the SFC’s commitment to creating a safe and transparent environment for trading virtual assets.
Let’s see all the details below.
The crackdown on unlicensed exchanges: Hong Kong’s commitment to a transparent and regulated crypto market
As anticipated, all criptovalute exchanges that have not applied for an operational license from the Securities and Futures Commission (SFC) of Hong Kong must immediately cease their operations in the region.
To minimize risks for investors, the regulatory authorities in Hong Kong have issued an ultimatum to cryptocurrency exchanges: apply for a license by February 29 or shut down operations within three months.
During this period, over 22 cryptocurrency exchanges have applied for a license, but many of them decided to withdraw their applications just before the deadline.
In the single month of May, six cryptocurrency exchanges, including big global names like OKX and Huobi HK, withdrew from the Hong Kong market.
The majority of the exchange has not provided explanations for this sudden change.
However, Gate.HK, based in Hong Kong, indicated the need for a “profound review” of its trading platform before it can comply with Hong Kong’s regulatory requirements.
Gate.HK closes operations: users invited to withdraw funds by August 28
As mentioned, following the revocation of the license, Gate.HK has ceased the acquisition and marketing of new users. Existing users were given time until August 28 to withdraw their funds.
The trading platform Gate.HK will no longer be operational from May 28, and all previously tradable tokens, such as Bitcoin (BTC), Ether (ETH), Solana (SOL), and Polygon (MATIC), will be permanently delisted.
“Gate.HK is actively working on the requested review. We plan to resume our activities in Hong Kong in the future and contribute to the virtual asset ecosystem after obtaining the necessary licenses.”
As of May 31, 18 cryptocurrency exchanges have applied for an operational license in Hong Kong. According to the SFC, the list of approved exchanges will be announced by June 1.
At the time of publication, the only cryptocurrency exchanges approved in Hong Kong are HashKey and OSL Exchange.
It is important to note that cryptocurrency exchanges may not be granted a license and, following the decision of the SFC, they may be required to shut down their operations in Hong Kong.
La SFC consiglia agli investitori di controllare l’elenco ufficiale degli exchange approvati per ridurre al minimo i rischi associati al trading di criptovalute.
The Chinese regulatory pressure pushes cryptocurrency companies to withdraw from Hong Kong
The regulatory pressure from mainland China is pushing many of the major cryptocurrency companies to withdraw their license applications in Hong Kong.
According to reports, the local affiliates of the main exchanges with ties to mainland China, including OKX, Gate.io, KuCoin, Binance, and HTX, have withdrawn their license applications for a virtual asset trading platform (VATP) in Hong Kong.
Despite the launch in China, all the listed cryptocurrency companies have expanded their operations in other regions after the initial regulatory crackdown by the Chinese authorities.
However, they have shown renewed interest in the new regulatory regime for virtual assets in Hong Kong that began last June, which requires them to obtain licenses to operate in the city.
The reports suggest that the stringent demands of the Securities and Futures Commission (SFC) and the inability to serve clients from mainland China may have contributed to these decisions.
In a recent memo, the SFC reminded exchange operators that they must be “considered authorized” by June 1st to continue operating in Hong Kong.
The Commission emphasized the obligation of the VAT to fully comply with applicable laws and regulations, particularly by preventing residents of mainland China from accessing their services related to virtual assets.
China intensified its crackdown on cryptocurrencies in 2021, when its central bank warned that offering cryptographic services within its borders violated the law.
Following this development, many exchanges have moved abroad, leaving limited operations threatened by further restrictions.