Hong Kong’s crypto ambitions are facing a surprise roadblock! The new licensing regime for crypto exchanges has sparked a firestorm, with some major players pulling out. Livio Weng, CEO of Hashkey Exchange, hints at a key sticking point – regulatory scrutiny of user bases from a specific, undisclosed “sensitive region.”
Could this be a dealbreaker for global crypto giants?
In an interview with Block, Weng mentioned that he couldn’t provide details about the “sensitive region,” which seemed crucial in negotiations between the Hong Kong Securities and Futures Commission (SFC) and exchanges that withdrew their license applications.
Read on to find out more.
Yat Siu, chairman of Animoca Brands, found it puzzling why exchanges would leave the Hong Kong market. He highlighted the city’s high awareness of crypto, its concentrated audience, and significant liquidity as strong reasons to stay.
The SFC required all applicants to avoid serving mainland Chinese users, which proved difficult for some exchanges. OKX tried to resist this requirement by forming an industry alliance but failed. As a result, major exchanges like OKX, Gate.io, and HTX withdrew their applications. OKX also announced plans to wind down its Hong Kong operations by the end of August.
Angela Ang, a former official at the Monetary Authority of Singapore, believed it was common for regulators to require that their licensees not contravene the laws of another jurisdiction. She also explained another factor of being unable to meet the regulatory expectations for a license, where withdrawal could be better than an outright rejection.
Hong Kong lawmaker Duncan Chiu criticized the strict regulations, arguing that they have deterred major global exchanges from entering the Hong Kong market, thereby weakening market confidence.
Boosting Market Integrity
Under Hong Kong’s new licensing regime, the SFC requires that all virtual asset trading platforms (VATPs) be licensed or deemed licensed applicants as of June 1st. This move aims to enhance investor protection and market integrity.
As the industry adapts to these new rules, the future of crypto exchanges in Hong Kong remains uncertain, with both opportunities and challenges ahead.
Will Hong Kong be able to attract major crypto exchanges again? Stay tuned for further developments!
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