Cryptocurrency exchange HKX has decided to shut down its operations in Hong Kong, joining a growing list of exchanges that have withdrawn their license applications with the city’s Securities and Futures Commission (SFC).
HKX initially applied for a Hong Kong license in February, but faced challenges in meeting the regulatory requirements set by Hong Kong authorities. As a result, HKX is one of 2 cryptocurrency exchanges or trading platforms that have withdrawn their applications for Hong Kong licenses. One of the applications was returned for undisclosed reasons.
In preparation for the closure, HKX stopped new user registrations and suspended trading and deposit services on May 5. With no plans to restart services or reapply for a license, the HKX management team announced the decision to cease operations and advised existing users to withdraw their crypto assets. The official statement on the HKX website is as follows:
“We would like to inform you that our management team has, after careful consideration, decided to withdraw our applications for Type 571 and Type 1 licenses under the Securities and Futures Ordinance (Cap. 7) and our application for a Virtual Asset Service Provider license under the Anti-Money Laundering and Terrorist Financing Ordinance (Cap. 615).”
Challenges faced by other exchanges
The number of cryptocurrency exchanges seeking to apply for operating licenses in Hong Kong is steadily decreasing as the deadline approaches. Recently, three cryptocurrency exchanges withdrew their license applications submitted to the Hong Kong Securities and Futures Commission.
On May 5, cryptocurrency exchanges IBTCEX and QuanXLab withdrew their applications, which were originally submitted in February 13. The next day, Huobi HK, a cryptocurrency exchange associated with HTX, also withdrew its application. The SFC website did not disclose the reasons for these withdrawals.
Gate.HK also stopped new user registrations and deposits and delisted all tokens. All cryptocurrency exchanges that have not applied for a license must stop operating in Hong Kong.
Currently, fewer than 20 cryptocurrency exchanges are applying for Hong Kong’s VATP license. The most recent application was submitted by Bitcoin World Technology Limited on May 5 on behalf of the “bitcoinworld” cryptocurrency exchange.
Under Hong Kong’s new virtual asset regime, the SFC may issue a notice to a company if it does not meet the conditions for “deemed licensing”, which allows a platform to be deemed licensed from June 6 while awaiting full approval. Companies that do not meet the conditions must close within three months of receiving the SFC’s notice.