HKX Wind Downs Operations in Hong Kong, Withdraws Licensing Application

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As a seasoned researcher with extensive experience in the cryptocurrency and digital asset trading industry, I have closely monitored the regulatory landscape in Hong Kong for several years. The recent decision by HKX to withdraw its licensing application and cease operations in the region comes as no surprise given the increasing scrutiny and stringent requirements set forth by the Hong Kong Securities and Futures Commission (SFC) and other relevant authorities.

HKX, a digital asset trading platform, has announced its decision to cease operations in Hong Kong and withdraw licensing applications from the Securities and Futures Commission (SFC). Users are urged to withdraw their cryptocurrencies as soon as possible.

Our management team has made the difficult decision to withdraw our applications for the Type 1, 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).

In February, HKX initiated the process of obtaining a license from Hong Kong authorities. Similar to other cryptocurrency trading platforms, HKX encountered challenges meeting Hong Kong’s regulatory requirements. One application was rejected without explanation, leading 13 other cryptocurrency exchanges or trading platforms to withdraw their applications by July 22.

HKX suspended trading and deposits, preparing for its shutdown. New user sign-ups were halted. The company has not announced plans to restart operations or seek a new license. However, they assured users that they would facilitate the withdrawal of all assets from the platform.

I’ve previously shared information about a warning issued by the Hong Kong Securities and Futures Commission (SFC). The SFC named seven crypto exchanges – Taurusemex, Yomaex, Bitones.org, BTEPRO, CEG, XTCQT, and Bstorest – for carrying out their activities in the region without obtaining the necessary registrations or approvals from the regulatory body.

HKX Is Not Alone

Several cryptocurrency exchanges have found Hong Kong’s regulatory environment challenging. Gate.HK, a prominent platform among them, withdrew its license application due to failure to meet local licensing conditions. The exchange announced its closure in May but also disclosed plans to rebuild its platform in accordance with Hong Kong’s legal requirements, such as Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations.

“Gate.HK is currently undergoing significant improvements, which we’ve previously mentioned. Our goal is to restart operations in Hong Kong at a later time and play a role in enhancing the digital asset industry once we secure the necessary permits.”

Hong Kong places great significance on establishing a more advanced regulatory structure for digital assets and the entities that deal with them, virtual asset service providers. According to Christopher Hui, the head of the Securities and Futures Commission (SFC) in Hong Kong, adjustments will be made to the licensing framework within the Special Administrative Region (SAR), leading to stricter enforcement against crypto exchanges. Furthermore, there are plans underway for a potential new licensing system specifically for crypto-to-fiat platforms to bolster investor confidence, particularly among international investors.

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2024-07-22 13:04