June 6, 2024
By Sharan Kaur Phillora
Livio Weng, CEO of HashKey Exchange, has suggested that Hong Kong’s financial regulator, the Securities and Futures Commission (SFC), may have considered the user base from a “sensitive region” when reviewing license applications from international crypto exchanges.
Here’s what we know:
In an interview, Weng indicated that this factor was a significant focus in the negotiations between the SFC and the exchanges that have since withdrawn their license applications.
The SFC has mandated that crypto trading platforms failing to submit their license applications by February 29 must cease operations in Hong Kong by May 31. Post-June, all Virtual Asset Trading Platforms (VATPs) operating in Hong Kong must be either licensed by the SFC or be “deemed-to-be-licensed” applicants, including Crypto.com, Bullish, and Matrixport HK.
Several global exchanges, such as OKX, Gate.io, and HTX, have withdrawn their license applications. OKX announced it would wind down its Hong Kong business by the end of August. Reports indicate that the SFC required all applicants to agree not to serve mainland Chinese users, a stipulation challenging for some exchanges to meet. OKX attempted to form an industry alliance to oppose this requirement but was unsuccessful.
The SFC reiterated that crypto trading platforms should implement measures to prevent Mainland Chinese residents from accessing their services. Angela Ang, a senior policy advisor at TRM Labs, noted that it is common for regulators to require licensees not to contravene the laws of another jurisdiction, making the SFC’s stance on China unsurprising but more explicit than expected.
Yat Siu, chairman of Animoca Brands, suggested that withdrawing applications could be a strategic move to create pressure for more favorable terms. Duncan Chiu, a Hong Kong lawmaker, criticized the “excessively stringent” regulations, arguing they have deterred major global exchanges from entering Hong Kong and dampened market confidence.
The withdrawals might also reflect the SFC’s consideration of market size, with Weng suggesting that the number of licenses should be adjusted based on market capacity.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
