The crypto exchange HKVAEX, linked to Binance, has withdrawn its application for a virtual asset trading platform license in Hong Kong post-deadline set by the Securities and Futures Commission (SFC). Despite submitting their application on January 4, HKVAEX decided to withdraw it nearly three months later. The SFC has only granted licenses to two exchanges, HashKey and OSL, with several other platforms, including HKVAEX, still waiting for approval. The reasons behind HKVAEX’s withdrawal are unclear, with speculation suggesting issues with the audit company or insufficient materials. HKVAEX is required to cease operations in Hong Kong by the deadline of May 31.
Additionally, three other virtual asset trading platforms also withdrew their license applications in 2024, including Huobi, a significant global crypto exchange. HTX, formerly known as Huobi, initially withdrew its license application in February but later resubmitted it after citing the SFC’s list of license applicants. While mainland China has been cracking down on crypto trading and mining, Hong Kong has been more welcoming to crypto firms, introducing a licensing regime for virtual asset trading platforms in June 2023. Many global exchanges have applied for retail trading licenses in Hong Kong, with the SFC currently reviewing applications from 19 crypto firms including OKX, Bybit, Bullish, and Crypto.com.
The Virtual Asset Trading Platform (VATP) license in Hong Kong allows crypto exchanges to operate within the region’s bounds. Only two exchanges have received this license so far, with several others still waiting for approval. HKVAEX reportedly shares technical and other resources with Binance, according to Chinese state media SCMP. The SFC maintains a list of licensed virtual asset trading platforms to raise public awareness of safe crypto trading. The deadline for crypto trading platforms to apply for regional operational licenses was set for February 29, with a deadline of May 31 for non-compliant exchanges to cease operations.
The withdrawal and resubmission of license applications by crypto exchanges in Hong Kong indicate the complexities and uncertainties in the regulatory environment. The reasons behind these actions remain unclear, with speculation suggesting various possibilities such as issues with audit companies or insufficient documentation. Despite the challenges, many global exchanges continue to pursue licenses in Hong Kong due to its more welcoming stance towards crypto firms compared to other jurisdictions. Investors are urged to verify the legitimacy of trading platforms by consulting the SFC’s public register of licensed persons and registered institutions.
While Hong Kong’s regulatory environment for crypto firms appears favorable compared to other jurisdictions, the recent actions of exchanges like HKVAEX and Huobi highlight the challenges and uncertainties that firms face in obtaining and maintaining operational licenses. The withdrawal and resubmission of license applications indicate the evolving nature of regulatory requirements and the need for exchanges to adapt to changing conditions. Despite these challenges, many global exchanges are still pursuing licenses in Hong Kong, reflecting the region’s attractiveness as a hub for crypto trading activities. It is essential for investors to exercise caution and verify the legitimacy of trading platforms before engaging in any transactions.
