Regulation
ultimatum to unlicensed cryptocurrency exchanges
Hong Kong officially bans all unauthorized cryptocurrency exchanges, i.e without 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.
Cracking down on unlicensed exchanges: Hong Kong’s commitment to a transparent and regulated cryptocurrency market
As anticipated, everything cryptocurrencies exchanges that have not applied for an operating license from the Securities and Futures Commission (SFC) in Hong Kong must stop immediately their operations in the region.
To minimize risks for investors, Hong Kong regulators have issued an ultimatum to cryptocurrency exchanges: apply for a license by February 29 or stop operations within three months.
During this period, over 22 cryptocurrency exchanges applied for a license, but many of them decided to withdraw their application shortly before the deadline.
In the month of May alone, six cryptocurrency exchanges, including big global names like OKX e Huobi Hong Kong, withdrawn from the Hong Kong market.
Most on the exchange offered no explanation for this sudden change.
However, Porta.HKbased in Hong Kong, has indicated the need for a “major overhaul” of its trading platform before it can comply with Hong Kong regulatory requirements.
Gate.HK closes operations: users invited to withdraw funds by August 28th
As mentioned, following the revocation of the license, Gate.HK ceased acquiring and marketing new users. Existing users have been given until August 28th withdraw their funds.
The Gate.HK trading platform will no longer be operational from May 28th 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 operations 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 operating 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 approved cryptocurrency exchanges 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 SFC’s decision, may be required to close their operations in Hong Kong.
The SFC advises investors to check the official list of approved exchanges to minimize the risks associated with cryptocurrency trading.
Chinese Regulatory Pressure Pressures Cryptocurrency Firms to Pull Out of Hong Kong
Regulatory pressure from mainland China is pushing many major cryptocurrency companies to withdraw their license applications in Hong Kong.
According to reports, local affiliates of major 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 launching in China, all listed cryptocurrency companies have expanded their operations to other regions after the initial regulatory crackdown by Chinese authorities.
However, they have shown renewed interest in the new regulatory regime for virtual assets in Hong Kong, which began last June, which requires them to obtain licenses to operate in the city.
Reports suggest that stringent demands from the Securities and Futures Commission (SFC) and the inability to serve customers from the mainland China may have contributed to these decisions.
In a recent note, the SFC reminded foreign exchange operators that they must be “deemed to be licensed” by June 1 to continue operating in Hong Kong.
The Commission highlighted VAT’s obligation to fully comply with applicable laws and regulations, in particular by preventing residents of mainland China from accessing their virtual asset services.
China stepped up its crackdown on cryptocurrencies in 2021, when its central bank warned that offering crypto services within its borders violated the law.
Following this development, many exchanges have moved overseas, putting limited operations at risk further restrictions.