Hong Kong Legislator Raises Concern Over Crypto Licensing System as Major Exchanges Withdraw Applicati
Hong Kong Legislative Council member Wu Shuo has voiced criticism against Hong Kong’s cryptocurrency licensing system, citing its impact on market confidence.
In an article published recently, Wu highlighted concerns surrounding the licensing requirements imposed by the Hong Kong Securities and Futures Commission (SFC), which have led several major exchanges to withdraw their license applications.
The licensing system, set to take effect on June 1, 2023, mandates that virtual asset trading platforms operating in Hong Kong obtain a license from regulatory authorities by the end of the transition period, which concludes on June 1, 2024.
Failure to obtain the license would result in the termination of their business operations.
Wu drew attention to the series of withdrawals that have taken place in recent months.
On March 28, 2024, HKVAEX, suspected to be affiliated with Binance, withdrew its license application.
Subsequently, on May 14, IBTCEX, QuanXLab, and Huobi HK followed suit, followed by Gate.HK on May 22, OKX HK on May 24, and Bybit (Spark Fintech Limited) on May 31.
These withdrawals have left only 17 virtual asset trading platforms remaining on the application list, with a total of 11 companies having withdrawn or returned their license applications.
Wu attributed the withdrawals to the requirement imposed by the Hong Kong SFC, which requires applicants for virtual asset trading platform licenses to commit to not having mainland Chinese users in any region. ‘
The requirement poses a challenge for traditional offshore exchanges, making it difficult for them to comply.
OKX attempted to form an industry alliance to oppose the requirement but was ultimately unsuccessful.
Industry insiders have mentioned that the entities that
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