Major Cryptocurrency Exchanges in Hong Kong Withdraw License Applications: Unveiling the Reasons Behind
Amidst the implementation of new licensing regulations for cryptocurrency exchanges in Hong Kong, Livio Weng, the CEO of Hashkey Exchange, has suggested that the city’s financial regulator may have taken into consideration the user base from a “sensitive region” when reviewing license applications from certain international exchanges. However, Weng did not provide further details about this “sensitive region,” which appeared to be a key focus in the negotiations between the Hong Kong Securities and Futures Commission (SFC) and the exchanges that withdrew their applications.
The reasons behind the exchanges’ withdrawal are unclear. Yat Siu, chairman of Animoca Brands, expressed his disbelief that any exchange would not want to do business in Hong Kong, given the high level of awareness in the market, the concentrated audience, and the high liquidity. During the negotiations, the SFC instructed all applicants not to serve mainland Chinese users in any region, a requirement that some exchanges found difficult to comply with. OKX attempted to resist this requirement by forming an industry alliance but was unsuccessful. Many global exchanges, including OKX, Gate.io, and HTX, have now withdrawn their license applications in Hong Kong, with OKX announcing plans to wind down its Hong Kong business by the end of August.
Angela Ang, a former official at the Monetary Authority of Singapore, stated that it is common for regulators to require their licensees to comply with the laws of other jurisdictions. She also highlighted that another reason for withdrawal may be the inability to meet regulatory expectations for a license, in which case withdrawal could be preferable to outright rejection. Hong Kong lawmaker Duncan Chiu raised concerns about the excessively stringent regulations for crypto exchanges to obtain a license, arguing that these rules have deterred major global exchanges from entering the Hong Kong market and undermined market confidence.
Under Hong Kong’s new licensing regime, all virtual asset trading platforms (VATPs) must be licensed or considered as license applicants after June 1st. This move aims to enhance investor protection and market integrity. It is important to understand the impact of laws and regulations on blockchain technology and cryptocurrencies like Bitcoin to assess their adoption.