Hong Kong Crypto Exchanges Face Regulatory Challenges
Hong Kong’s cryptocurrency market is undergoing significant changes as exchanges grapple with stringent new regulatory requirements. Gate.HK, a prominent player in the local crypto scene, recently announced the suspension of its operations after failing to meet the necessary licensing criteria set by the Hong Kong Securities and Futures Commission (SFC). This move is part of a broader trend, with other major exchanges like OKX and Huobi Hong Kong also withdrawing their license applications.
Gate.HK submitted its license application on February 28, aiming to comply with the new regulations that mandate all crypto exchanges operating in Hong Kong to be licensed by June 1. However, on May 22, Gate.HK withdrew its application, citing the need for a “major overhaul” of its trading platform to meet these regulatory standards. As of May 23, Gate.HK has ceased acquiring new users and marketing its services, and will fully shut down its trading platform by May 28, with all tokens, including Bitcoin, Ether, Solana, Polygon, and Tether, being permanently delisted. Existing users can withdraw their funds until August 28.
Gate.HK’s overhaul aims to align its operations with the SFC’s requirements, including the implementation of robust Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) measures. The exchange has expressed its intent to relaunch its services after obtaining the relevant licenses, highlighting its commitment to contributing to the virtual asset ecosystem in Hong Kong.
This regulatory tightening is part of Hong Kong’s broader strategy to establish itself as a virtual asset hub. The new mandatory licensing regime for centralized exchanges, effective from June 2023, demands extensive compliance efforts and capital investments from firms. Those unable to meet these stringent criteria must cease operations by May 31 or within three months of receiving a notification from the SFC.
Gate.HK is not alone in this struggle. Earlier, Huobi Hong Kong, QuanXLab, and IBTCEX also withdrew their license applications. OKX, another major exchange, announced on May 24 that it would discontinue its centralized virtual asset trading services in Hong Kong by May 31, 2024. OKX assured users that their funds remain safe and withdrawal services will be available until August 31. After this date, any remaining balances will be treated as unclaimed property under the platform’s terms.
OKX emphasized that its withdrawal was part of a strategic reevaluation and that it remains committed to maintaining compliant operations in other regions, as evidenced by its recent licensing achievements in Dubai, Turkey, and Australia.
