Cryptocurrency exchange HKX has decided to withdraw its license application from the Hong Kong Securities and Futures Commission (SFC). The Hong Kong-based exchange struggled to meet regulatory requirements set by Hong Kong authorities and has decided to shut down its operations. HKX initially applied for a license in February but has now announced the withdrawal of its application. The exchange had already halted new user registrations and suspended trading and deposit services as of May 29, with no immediate plans to resume operations or reapply for a license.
The withdrawal of HKX’s license application adds to the growing list of exchanges that have faced obstacles in obtaining regulatory approval in Hong Kong. A total of 13 cryptocurrency exchanges or trading platforms have withdrawn their license applications in Hong Kong as of July 22. Legislator Wu Shuo has criticized Hong Kong’s cryptocurrency licensing system, citing its impact on market confidence. The requirement imposed by the SFC for virtual asset trading platform licenses to commit to not having mainland Chinese users in any region has posed a challenge for offshore exchanges, making it difficult for them to comply.
HKVAEX, suspected to be affiliated with Binance, withdrew its license application on March 28, followed by IBTCEX, QuanXLab, and Huobi HK on May 14, Gate.HK on May 22, OKX HK on May 24, and Bybit on May 31. Additionally, one application was returned for undisclosed reasons. Industry insiders suggest that the entities that have withdrawn their applications may potentially update their legal frameworks or entities and reapply in the future. However, they may not be able to reapply using a brand similar to that of an offshore exchange. Currently, only 11 platforms remain as licensed applicants, with OSL and HashKey being the only ones to have obtained formal licenses thus far.
Hong Kong has recently launched its first batch of ETFs focused on cryptocurrencies, marking potential competition for Bitcoin products in the United States. Concerns have been raised over the cryptocurrency licensing system in Hong Kong, with the requirement imposed by the SFC posing challenges for offshore exchanges. The withdrawal of HKX’s license application is part of a trend where several exchanges have faced obstacles in obtaining regulatory approval in Hong Kong. The future of these exchanges remains uncertain, with the possibility of updating legal frameworks and reapplying for licenses under different entities.
