- HKX to cease operations in Hong Kong due to regulatory compliance issues.
- Thirteen crypto exchanges have had their license applications withdrawn or rejected in Hong Kong.
- Another exchange, Gate.HK, plans to overhaul platform to meet regulatory standards and resume operations, after a similar move.
HKX cryptocurrency exchange, hi5 (Hong Kong) Limited, has announced its decision to cease operations in Hong Kong. This decision follows challenges in meeting the region’s stringent regulatory requirements.
The announcement was made on July 18, with the HKX management advising users to withdraw their assets promptly.
HKX withdraws license application
The Securities and Futures Commission (SFC) of Hong Kong has added HKX to its list of cryptocurrency exchanges that have withdrawn their license applications.
HKX had initially applied for the necessary licenses in February, seeking compliance with both the Securities and Futures Ordinance (Cap. 571) and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615).
However, despite these efforts, HKX struggled to meet the regulatory standards set by Hong Kong authorities.
In a statement published on their official website, the HKX management elaborated on their decision stating: “We would like to inform you that our management team has, after careful consideration, decided to withdraw our application for the Type 1 and Type 7 licenses under the Securities and Futures Ordinance and the virtual asset service provider license under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.”
Crypto exchanges withdraw licenses applications in Hong Kong
HKX’s decision to exit the Hong Kong market is part of a broader trend. According to the information on the SFC website, a total of 13 cryptocurrency exchanges had either withdrawn their license applications or had their applications refused and returned by the SFC by July 22.
The increasing regulatory scrutiny and the high standards required for compliance have posed significant challenges for crypto exchanges operating in the region.
Gate.HK, another Hong Kong-based cryptocurrency exchange, had previously faced similar challenges. OKX also withdrew its VASP license application in May.
After failing to meet the local licensing requirements, Gate.HK withdrew its application but announced plans to overhaul its platform to align with regulatory standards. The exchange is currently focused on allowing withdrawals for its customers and aims to resume operations in the future, contributing to the virtual asset ecosystem once the necessary licenses are obtained.
In preparation for its shutdown, HKX had already halted new user registrations and suspended trading and deposit services on May 29. The company emphasized its commitment to assisting users with the safe withdrawal of their assets, ensuring a smooth transition during the winddown process.
However, there are no immediate plans for HKX to restart services or reapply for a license.
This wave of exits underscores the complex regulatory landscape in Hong Kong for cryptocurrency exchanges.
As the HKSFC continues to enforce stringent compliance measures, the future of cryptocurrency trading in the region remains uncertain, with only those able to meet these rigorous standards likely to continue operations.