Regulation
Crypto exchanges leave Hong Kong due to strict SFC rules
that of Hong Kong crypto ambitions are faced with a surprise barrage! The new licensing regime for crypto exchanges has sparked a firestorm, with some major players pulling out. Livio Weng, CEO of Hashkey Exchange, hints at a key sticking point: regulatory control of user bases from a specific, undisclosed “hot region.”
Could this pose a hurdle for global crypto giants?
In an interview with Block, Weng mentioned that he could not provide details on the “sensitive region”, which seemed crucial in the negotiations between the Securities and Futures Commission (SFC) of Hong Kong and the exchanges which withdrew their license applications.
Continue reading to learn more.
Reasons behind withdrawals
Yat Siu, chairman of Animoca Brands, questioned why exchanges would exit the Hong Kong market. He pointed to the city’s high crypto awareness, concentrated audience, and deep liquidity as strong reasons to stay.
THE SFC required all applicants to avoid serving mainland Chinese users, which proved difficult for some exchanges. OKX attempted to resist this demand by forming an industrial alliance, but failed. As a result, major exchanges like OKX, Gate.io, and HTX withdrew their applications. OKX also announced plans to end its Hong Kong operations by the end of August.
Regulatory expectations
Angela Ang, a former head of the Monetary Authority of Singapore, says it is common for regulators to require their licensees not to contravene the laws of another jurisdiction. She also explained another factor related to failure to meet regulatory licensing expectations, where withdrawal might be preferable to outright rejection.
Hong Kong lawmaker Duncan Chiu has criticized these strict regulations, arguing that they have deterred major global exchanges from entering the Hong Kong market, thereby weakening market confidence.
Strengthening market integrity
Under Hong Kong’s new licensing regime, the SFC requires all virtual asset trading platforms (VATPs) to be licensed or considered licensed applicants from June 1. The move aims to strengthen investor protection and market integrity.
As the industry adapts to these new rules, the future of crypto exchanges in Hong Kong remains uncertain, with both opportunities and challenges ahead.
Will Hong Kong be able to attract big crypto exchanges again? Stay tuned for future developments!