Crypto exchange HKX disclosed that it is terminating its operations in Hong Kong, citing issues with the country’s regulatory compliance. The crypto firm has withdrawn its license application and advised users to deduct funds from the platform. Hong Kong’s legal authorities impose stringent regulatory measures, causing major exchanges to leave the market.
Hong Kong’s Stricter Compliance Pushed HKX to End Operations
In February 2024, HKX applied for a license from the Securities and Futures Commission (SFC) in Hong Kong to operate as an authorized entity in the state. Unfortunately, it failed to comply with regulatory standards set by the state’s regulatory agency. Notably, HKX is not the only crypto exchange to leave the regime; stricter regulatory standards have led many crypto exchanges to withdraw their license applications.
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The exchange’s management announced via its official site about the exchange’s decision to shut down in Hong Kong. It reads:
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 (Cap. 571) and the virtual asset service provider license under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615).
The exchange has suspended its deposit function, trading services, and new user sign-ups since May 2024. In the latest announcement, the platform cleared that there are no immediate plans for a license reapplication or restart of services in the state. However, the management team affirmed that the exchange is committed to assisting its Hong Kong users with safe and smooth withdrawals of assets in all cryptocurrencies available on the platform. The HKX further assured the safety of funds until the withdrawals and notified the user about eligibility to deduct funds from external accounts.
Major Exchanges Exiting Hong Kong Market
HKX’s exit from the Hong Kong Market is part of an ongoing trend followed by many exchanges. To date, 13 leading crypto exchanges, including Houbi HK, Gate. HK and OKX have withdrawn their license applications from SFC.
Gate.HK, a Hong Kong-based exchange, has faced similar troubles in obtaining a license from the state’s law enforcement agencies and failed to meet the imposed requirements. As a result, it withdrew its licensing application on May 22, 2024. Unlike the HKX, Gate.HK disclosed that the platform will improve its legal operations to comply with the regulatory requirements. Similarly, the exchange plans to re-establish its services in the state after improving Anti-money laundering and Terrorist Finance measures.
Gate.HK stated:
Gate.HK is actively working on the aforementioned overhaul. We plan to resume our business in Hong Kong in the future and contribute to the virtual asset ecosystem after obtaining the relevant licenses.
Nevertheless, widespread crypto adoption has forged an evolving future of digital assets intended to shape a better economic landscape. Considering this, regulatory authorities are exploring ways to implement a balanced state of regulations and measures to ensure transparency.
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