In a significant development for the cryptocurrency industry, the HKX exchange has announced its departure from the Hong Kong market, citing regulatory compliance issues as the primary reason for its exit. The move reflects the ongoing struggles faced by crypto exchanges in meeting stringent local regulations.
HKX Shuts Down Operations in Hong Kong
On July 18, 2024, HKX, a prominent cryptocurrency exchange, declared its decision to cease operations in Hong Kong. The announcement, posted on the exchange’s official website, urged all users to promptly withdraw their assets. The statement read:
“After thorough deliberation, our management team has 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).”
This move comes after HKX’s initial application for a Hong Kong license, submitted in February, failed to meet the regulatory standards set by the Hong Kong Securities and Futures Commission (SFC).
Ongoing Compliance Struggles for Crypto Exchanges
The decision by HKX to withdraw from the Hong Kong market is not an isolated incident. As of July 22, 2024, a total of 13 cryptocurrency exchanges or trading platforms have either withdrawn their license applications or had their applications returned for unspecified reasons. This trend highlights the increasing difficulty that crypto exchanges face in navigating Hong Kong’s evolving regulatory landscape.
HKX had already suspended new user registrations and trading activities on May 29, in preparation for its exit. The exchange has committed to facilitating the secure withdrawal of user assets and has no plans to reapply for a license or resume operations in Hong Kong.
Gate.HK’s Regulatory Challenges and Future Plans
In a related development, Gate.HK, another Hong Kong-based cryptocurrency exchange, also withdrew its license application earlier this year, unlike HKX, Gate.HK has announced plans to revamp its platform to align with Hong Kong’s regulatory requirements. The exchange aims to implement Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) measures to comply with local regulations.
Gate.HK’s spokesperson noted:
“Gate.HK is actively working on the necessary adjustments to meet regulatory standards. We are committed to resuming operations in Hong Kong once we obtain the required licenses and contribute positively to the virtual asset ecosystem.”
At present, Gate.HK permits only the withdrawal of funds for its users as it undertakes these regulatory adjustments.
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