Blockchain
Hong Kong sees third major cryptocurrency exchange withdraw license application as unit Gate.io folds
Gate.HK, the Hong Kong branch of cryptocurrency exchange Gate.io, has withdrawn its application for a license for a virtual asset trading platform, the third affiliate of a major global exchange to end its offering to operate legally in the city under a demanding new regime.
The company “took a proactive step” by withdrawing its application as part of a “platform review” and stopped registering new users, accepting deposits and marketing its services in Hong Kong, according to its statement published on Wednesday.
Gate.HK, launched in May last year, submitted its application to the Securities and Futures Commission (SFC) in February under new rules requiring exchanges serving Hong Kong customers to be licensed.
The platform said it will cease operations on May 28, as required by city regulations, and suggested users collect their goods by August 28.
A cryptocurrency advertisement in Tsim Sha Tsui, Hong Kong. Photo: SCMP/Xiaomi Chen
Hong Kong’s new compulsory licensing regime for centralized exchanges, which came into force in June last year amid the city’s push to become a virtual asset hub, requires intense compliance efforts and capital investments from companies that they hope to gain a foothold in the city.
Under the new rules, the SFC can issue a warning to a company if it does not qualify for a so-called evaluation agreement, where the platform is deemed to have been licensed as of June 1 while it awaits full approval for a license. Businesses that fail to qualify are required to close by May 31 or within three months of notification from the SFC, whichever is later.
Meeting the SFC’s requirements proved challenging. Eight companies have withdrawn their applications to date, according to the regulator’s official website, and these include local firms with ties to well-known global stock exchanges.
Gate.io, the parent company of Gate.HK, ranked sixth in 24-hour trading volume on Friday, according to market tracker CoinGecko.
Gate.HK “remains committed to maintaining compliant operations in Hong Kong” and is exploring the possibility of applying for other regulatory licenses in the city, the company’s chief executive Kevin Lee said in a statement.
“Our overall business strategy to have a presence in Hong Kong has not been changed,” he said.
There currently remain 20 applicants for the Hong Kong virtual asset platform license, including OKX, Crypto.com, Bybit and Bullish. Two exchanges, Hashkey Exchange and OSL Exchange, have been approved to serve retail investors.