Cryptocurrency exchange HKX has decided to withdraw its license application from the Hong Kong Securities and Futures Commission (SFC), becoming the latest exchange to do so.
In an announcement made by the HKX management team, the Hong Kong-based crypto exchange stated that it would be shutting down its operations and advised existing users to withdraw their crypto assets.
“After careful consideration, our management team has decided to withdraw our application for the Type 1 and Type 7 licenses,” the exchange wrote in an official notice published on its website.
HKX Failed to Meet Regulatory Requirements
HKX initially applied for a license in Hong Kong back in February, but, like many other exchanges, it struggled to meet the regulatory requirements set by the Hong Kong authorities.
In preparation for its winddown, HKX had already halted new user registrations and suspended trading and deposit services as of May 29.
While the exchange currently has no immediate plans to resume its operations or reapply for a license, it is committed to facilitating the safe withdrawal of all assets for its users.
HKX Exits Hong Kong Market
HKX has joined the list of crypto exchanges withdrawing from Hong Kong. The Securities and Futures Commission (HKSFC) announced that HKX has pulled its license applications.
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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.
As of July 22, a total of 13 cryptocurrency exchanges or trading platforms have withdrawn their license applications in Hong Kong.
On March 28, 2024, HKVAEX, suspected to be affiliated with Binance, withdrew its license application.
Subsequently, on May 14, IBTCEX, QuanXLab, and Huobi HK followed suit, followed by Gate.HK on May 22, OKX HK on May 24, and Bybit (Spark Fintech Limited) on May 31.
Additionally, one application was returned for undisclosed reasons.
Legislator Raises Concern Over Crypto Licensing System
Just recently, Hong Kong Legislative Council member Wu Shuo has voiced criticism against Hong Kong’s cryptocurrency licensing system, citing its impact on market confidence.
Wu attributed the withdrawals to the requirement imposed by the Hong Kong SFC, which requires applicants for virtual asset trading platform licenses to commit to not having mainland Chinese users in any region.
The requirement poses a challenge for traditional offshore exchanges, making it difficult for them to comply.
OKX attempted to form an industry alliance to oppose the requirement but was ultimately unsuccessful.
Industry insiders have mentioned that the entities that have withdrawn their applications could 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, 11 platforms, including HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixincom, xWhale, YAX, Bullish, Cryptocom, WhaleFin, and Matrixport HK, remain as licensed applicants.
Only OSL and HashKey have obtained formal licenses thus far.
Meanwhile, Hong Kong has launched its first batch of ETFs focused on cryptocurrencies, marking potential competition for the popular Bitcoin products in the United States.
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