HKX Crypto Exchange Drops License Application—What It Means for Traders!: Cryptocurrency exchange HKX has recently withdrawn its license application from the Hong Kong Securities and Futures Commission (SFC), marking the latest in a series of such withdrawals by exchanges.
In an [official announcement] HKX informed its users of the decision to cease operations and urged them to withdraw their assets. After significant deliberation, the exchange’s management explained that they chose not to proceed with their application for the Type 1 and Type 7 licenses, as stated in a notice on their website.
HKX Crypto Exchange Drops License Application
HKX’s challenges in meeting regulatory standards have been significant; it initially submitted its license application in February but struggled to fulfill the requirements set by Hong Kong regulators. As part of its closure process, HKX had already suspended new user registrations and trading activities as of May 29. While there are no immediate intentions to restart operations or reapply for a license, the exchange is focused on ensuring that all users can safely withdraw their assets.
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HKX Encounters Regulatory Challenges
HKX had submitted its license application in February but struggled to meet the stringent regulatory requirements. As part of its shutdown strategy, the exchange halted new user registrations and suspended trading and deposit services from May 29. Although there are no plans to resume operations or seek a new license, HKX is focused on ensuring that users can securely withdraw their assets.
The withdrawal of HKX’s license application is part of a broader trend, with a total of 13 cryptocurrency exchanges retracting their applications in Hong Kong this year alone. Notable withdrawals have included HKVAEX on March 28, 2024, followed by IBTCEX, QuanXLab, and Huobi HK in mid-May, and then Gate.HK, OKX HK, and Bybit towards the end of May.
Legislative Criticism Over Current Licensing System
Hong Kong Legislative Council member Wu Shuo has critiqued the territory’s cryptocurrency licensing system, pointing out its negative impact on market confidence. Wu highlighted that the regulatory requirement forbidding applicants from having mainland Chinese users is particularly challenging for traditional offshore exchanges. Despite efforts by some entities, such as OKX, to form alliances to oppose this mandate, compliance has proven difficult.
Industry observers note that many exchanges may revise their legal structures or entities in the hope of reapplying. However, they might have to do so under different brands. Currently, 11 platforms like HKbitEX, PantherTrade, Accumulus, and others remain in the licensing process, with only OSL and HashKey having achieved full licensure thus far.
In parallel, Hong Kong has introduced its first-ever ETFs centered on cryptocurrencies, signifying a potential rival to the popular Bitcoin offerings in the U.S. This development could signal a new chapter in the region’s approach to digital assets.
