Hong Kong’s Securities & Futures Commission (SFC) has mandated that all unlicensed virtual asset trading platforms (VATPs) must leave the city as of tomorrow, June 1, 2024. The SFC has stated, “All VATPs operating in Hong Kong must either be licensed by the SFC or be considered “deemed-to-be-licensed” VATP applicants under the AMLO.”
In a move to reduce investor risk, Hong Kong regulators issued a clear ultimatum to crypto exchanges on February 29: apply for a license by that date or cease operations within three months. That deadline has now arrived.
All unlicensed crypto exchanges in the region are now legally required to cease operations immediately due to their failure to apply for an operational license from the Securities and Futures Commission.
During the application period, 22 crypto exchanges submitted license applications to maintain a presence in the region. However, before the deadline, many of these exchanges chose to withdraw their applications. In May alone, six crypto exchanges, including major players like OKX and Huobi HK, exited the Hong Kong market.
Gate.HK, a Hong Kong-based exchange, explained that the unexpected development forced them to make significant changes to their trading platform to comply with Hong Kong’s regulatory standards.
Professor Chen Chun of the Chinese Academy of Engineering described Hong Kong as a “sandbox” for developing Web3 and Mainland China’s digital economy. He emphasized the need for a digital currency that can navigate the complexities of the Web3 network and suggested that Hong Kong regulators consider an initial money supply of $26 million to $260 million for their central bank digital currency.
As of May 31, 2024, 18 crypto exchanges have applied for a license to operate in Hong Kong. The SFC has announced that the list of approved exchanges will be released by June 1.
The SFC’s strict requirements have led to the withdrawal of seven out of the original 24 exchange applications, particularly those with ties to Mainland China. Restrictions on serving mainland customers were a significant factor in these withdrawals.
Despite China’s ban on Bitcoin, Hong Kong continues to play a crucial role in the development of Web3 and Mainland China’s digital economy. With ongoing regulatory developments, Hong Kong aims to establish itself as a key player in the digital currency space.
The SFC recently received a new license application from a platform named Bitcoinworld, which had improperly used HTX’s logo. HTX clarified that the company is neither a subsidiary nor a related entity to Bitcoinworld.
In conclusion, Hong Kong’s evolving regulatory landscape and role in the digital economy are key factors shaping the future of cryptocurrency exchanges in the region.
