Hong Kong Enforces Closure of Unlicensed Crypto Exchanges

All cryptocurrency exchanges operating without a valid operational license from the Securities and Futures Commission (SFC) of Hong Kong are mandated to cease their activities immediately.

In a bid to safeguard investor interests, Hong Kong regulators issued a decisive directive to cryptocurrency exchanges: either submit a license application by Feb. 29 or halt operations within three months.

Notice issued by the Hong Kong SFC about the closure of crypto license applications. Source: Hong Kong SFC

Throughout this period, over 22 cryptocurrency exchanges sought licenses to continue operating within the region. However, many of these exchanges opted to withdraw their applications just prior to the deadline.

List of crypto exchanges that withdrew license applications in Hong Kong. Source: Hong Kong SFC

During May, six cryptocurrency exchanges, including major global players like OKX and Huobi HK, withdrew from the Hong Kong market. While most exchanges refrained from disclosing reasons for this unexpected development, Hong Kong-based Gate.HK cited the necessity for a "major overhaul" of its trading platform to comply with regulatory standards.

Subsequent to the license withdrawal, Gate.HK ceased user acquisition and marketing activities. Existing users were granted until Aug. 28 to withdraw their funds. The Gate.HK trading platform ceased operations on May 28, with all previously tradable tokens, including Bitcoin (BTC), Ether (ETH), Solana (SOL), and Polygon (MATIC), being permanently delisted.

Gate.HK expressed active engagement in the aforementioned overhaul and disclosed plans to resume operations in Hong Kong post obtaining relevant licenses, reaffirming commitment to contribute to the virtual asset ecosystem.

As of May 31, 18 cryptocurrency exchanges have applied for operational licenses in Hong Kong. The SFC is set to announce the list of approved exchanges by June 1. However, it's crucial to acknowledge that not all cryptocurrency exchanges may secure a license and may consequently be mandated to terminate their operations in Hong Kong.

To mitigate risks associated with cryptocurrency trading, the SFC advises investors to refer to the official list of approved exchanges.