Hong Kong prepares to close all unauthorized cryptocurrency exchanges
The departure of crypto exchanges from Hong Kong raises concerns about the region’s ambitions to establish itself as a global crypto hub. The Securities and Futures Commission (SFC) of Hong Kong has mandated that all cryptocurrency exchanges operating in the region without a license must immediately cease operations.
At the start of the year, the SFC set a deadline for exchanges to either apply for a license by Feb. 29 or halt operations within three months. While 22 exchanges initially applied for licenses, some withdrew their applications just before the deadline. Notably, six major platforms, including OKX, Gate.HK, and Huobi HK, exited the Hong Kong market, citing various reasons for their decisions.
Effective June 1, virtual asset trading platforms in Hong Kong must be licensed under the Anti-Money Laundering and Anti-Terrorism Financing Order to operate legally. Failure to comply with the SFC standards could result in the refusal of a license and force platforms to cease operations in Hong Kong.
Despite the regulatory changes, some exchanges are one step closer to obtaining licenses, such as HKbitEX, VDX, and HKVAX. However, industry giants like Binance, Coinbase, and Kraken did not apply for permits. Additionally, the SFC has imposed a prohibition on exchanges serving clients from mainland China, further complicating the situation.
While China has banned cryptocurrency trading, Hong Kong has embraced digital assets and is moving towards becoming a crypto-friendly region. Recent legislative developments have legalized retail transactions with cryptocurrency and introduced mandatory licensing for crypto service providers. The launch of Bitcoin and Ethereum spot ETFs in Hong Kong is expected to attract international investors and expand the client base.
Despite concerns about strict compliance measures, Hong Kong’s pro-cryptocurrency stance and regulatory efforts are positioning the region as a leading cryptocurrency hub. With mandatory licensing for crypto exchanges, Hong Kong is poised to strengthen its position in the global crypto market.
