Regulation
Cryptocurrency Exchanges Leave Hong Kong Under Strict SFC Rules
In the middle of Hong Kong’s new licensing regimes for cryptocurrency exchangesLivio Weng, CEO of Hashkey Exchange, pointed out that Hong Kong’s financial regulator may have taken user base from a “sensitive region” into consideration when reviewing the license applications of some international cryptocurrency exchanges.
Weng, however, in an interview with Block, revealed that he could not elaborate on the issue of the “sensitive region”, which appeared to be the main focus of the Hong Kong-Hong Kong negotiations. Securities and Futures Commission (SFC) and exchanges that have withdrawn their license applications.
Why did the exchanges retreat?
Yat Siu, president of Animoca Brands, said it was difficult to make a statement about why these exchanges withdrew their license applications. He couldn’t believe that some exchanges wouldn’t want to do business in Hong Kong, given the increased awareness of the space, concentrated audience and high liquidity.
During negotiations, the SFC had asked all applicants not to serve mainland Chinese users in any region, which would be difficult for some exchanges to comply with. OKX had attempted to form an industry alliance by resisting the request, but had failed. Many global exchanges, including OKX, Gate.io and HTX, have withdrawn their license applications in Hong Kong. OKX had revealed plans to close its operations in Hong Kong by the end of August.
Regulatory expectations
Angela Ang, a former official at the Monetary Authority of Singapore, believes it is normal for regulators to require that their licensees do not violate the laws of another jurisdiction. You also explained another factor that explains the failure to meet regulatory expectations for a license, where withdrawal may be better than outright refusal.
A Hong Kong lawmaker, Duncan Chiu, also expressed concern about the overly stringent rules for cryptocurrency exchanges to obtain a license, criticizing the fact that the rules have prevented major global exchanges from entering Hong Kong, weakening market confidence.
In Hong Kong’s new licensing regime, the SFC now requires that, after June 1, all virtual asset trading platforms (VATPs) must obtain a license or be deemed to require licensing, in an effort to improve the protection of investors and market integrity.
Also find out how laws and regulations influence blockchain technology and cryptocurrencies, such as Bitcoin, can influence its adoption.