- Hong Kong has halted crypto exchange licensing, mandating closure of noncompliant platforms by May 31, 2024.
- Only two crypto trading operators are formally licensed in Hong Kong, with others either applying or ceasing operations.
- The Securities and Futures Commission will list licensed exchanges and enforce marketing and operational restrictions during the shutdown.
Hong Kong has announced the cessation of license applications for cryptocurrency exchanges as of February 29. The city’s financial watchdog, the Securities and Futures Commission (SFC), is imposing a strict deadline for all trading platforms that haven’t applied for a license. By May 31, 2024, these platforms must either secure their licenses or shut down their operations in the region.
Regulatory Tightening
This move underscores Hong Kong’s commitment to regulating the burgeoning cryptocurrency market. The SFC has been clear in its directives, urging investors to transition to compliant platforms ahead of the deadline. So far, only OSL Digital Securities and HashKey Exchange have met the SFC’s licensing requirements, with their approvals coming in December 2020 and November 2022, respectively.
Impact on the Crypto Landscape
The SFC’s decision affects numerous exchanges, with 22 having submitted applications under the new regulatory framework. However, not all have succeeded in moving forward in the licensing process. Exchanges like Huobi HK and Meex, among others, have either withdrawn their applications or had them returned. The forthcoming public list of platforms slated for closure aims to enhance transparency and investor awareness of the changes.
As the deadline approaches, affected exchanges will face operational limitations and a halt to all local marketing efforts. Post-June 1, 2024, the SFC will release a list of exchanges deemed eligible for licensing, although this does not guarantee approval for all. Licensed platforms will initially be permitted to offer Bitcoin and Ether trading, with the SFC reviewing additional cryptocurrencies for potential inclusion.
This regulatory overhaul follows recent disruptions in the local crypto market, such as BitForex’s unexplained suspension of withdrawals, highlighting the urgency for clearer oversight and consumer protection in the digital asset space.
