April 19, 2024
Policy & Regulation

Hong Kong Halts Crypto Exchange Licensing and Orders Closure of Noncompliant Platforms

In a significant move impacting the cryptocurrency landscape, Hong Kong has ceased accepting license applications from crypto exchanges, effective February 29. The Securities and Futures Commission (SFC) of Hong Kong has issued a directive that mandates all noncompliant crypto trading platforms without a filed license application to shut down operations locally by May 31, 2024.

Notice informing the closure of crypto license applications. Issued by the Hong Kong SFC. Source: sfc.hk

The SFC, responsible for regulating virtual asset trading platforms, urged investors to “make preparations early” and migrate to platforms with operating licenses or those that have applied for one. The SFC officially granted licenses to OSL Digital Securities on December 15, 2020, and HashKey Exchange on November 9, 2022, while 22 other platforms await approval.

Four exchanges, namely Huobi HK, Meex, BitHarbour, and Ammbr, initially applied for licenses but withdrew or had their applications returned. The SFC plans to maintain a public list of crypto platforms required to close, enhancing transparency and awareness of potential risks.

During the closure period, Hong Kong will restrict exchange operations and enforce the cessation of all marketing activities. The SFC will release a list of licensed crypto exchanges as of June 1, 2024, though it does not guarantee licenses for all listed platforms.

Once licensed, crypto exchanges gain the ability to onboard retail investors for trading Bitcoin and Ether. The SFC is currently reviewing various altcoins and stablecoins for potential trading approval.

In a related development, Hong Kong-based crypto exchange BitForex has raised concerns as it went incommunicado after suspending withdrawals for at least three days. Users reported issues ranging from the inability to access their accounts to the dashboard not displaying assets. The exchange’s X account has not been updated since May 2023, and users are encountering difficulties accessing the company’s website.

These developments mark a critical juncture in Hong Kong’s crypto regulatory landscape, reflecting the growing global scrutiny of digital asset markets and the need for comprehensive oversight.

Image by rawpixel.com on Freepik

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