Unapproved bitcoin exchanges, Bitcoin exchanges are moving out of Hong Kong. Does this threaten the region’s hopes to become a global centre for cryptocurrency? Suppose they haven’t already sought a license to operate from the Hong Kong Securities and Futures Commission (SFC). In that instance, the government of Hong Kong has declared that all cryptocurrency exchanges operating within the jurisdiction must immediately shut down.
At the start of the year, the SFC stated the bitcoin exchanges had three months to close or apply for a license by February 29. At least 22 Bitcoin exchanges applied for Hong Kong licenses by the SFC deadline.. But a few of them pulled their applications just before the cutoff.
Journalist Colin Wu reports six international platforms, including OKX and Gate.HK and Huobi HK—left the Hong Kong market last month. Furthermore, many had to specify the rationale for their sudden choice. Gate only. HK stated that an “overhaul” of its trading platform was necessary to meet Hong Kong regulatory standards.
Compulsory License
In Hong Kong, virtual asset trading platforms (VATPs) must have an AMLO license starting June 1. A VATP cannot be “deemed to be licensed” under the new rules unless they currently have a license from the Financial Services Council. There are severe consequences for acting contrary to the norms.
Platforms may be required to stop operating in Hong Kong if the license is refused for noncompliance with SFC criteria. Unapproved bitcoin exchanges, The SFC highlights that the restrictions are only transitory and are meant to promote market growth and protect investors.
Who can get a License?
Bloomberg reports that the SFC declared at the beginning of June that several Bitcoin exchanges were getting licenses. Companies including HKbitEX, VDX, HKVAX, PantherTrade, Accumulus, DFX Labs, Bixin.com, xWhale, bitV, YAX, Bullish, Crypto.com, WhaleFin, Matrixport HK, HKX, and bitcoinworld are among the total number of applications.
Large platforms such as OKX have also withdrawn their applications for permits simultaneously. The biggest exchange in the world, Binance, along with Coinbase and Kraken, did not apply.
Prohibition on Servicing Clients from China
With the “one country, two systems” principle in place, China has recognized Hong Kong as a Special Administrative Region (SAR) since July 1997.” At the same time, there are fundamental differences between the perspectives of the two areas on cryptocurrencies.
Unapproved bitcoin exchanges, Since September 2021, China has outlawed the trading of cryptocurrencies, yet demand for Bitcoin (BTC) is rising. Despite the ban, China’s underground bitcoin sector still has enormous trading volumes. Hong Kong welcomes digital assets and is experiencing a slowdown in the economy, encouraging investors to buy them.
Colin Wu disclosed some information on getting official permission. Several hopefuls told him that the SFC wanted guarantees from those seeking licenses that the exchanges would never serve customers in mainland China. in the world. According to the insider, some bitcoin exchanges may have fled Hong Kong because of this condition.
Hong Kong Heads to Web3
The government declared in October 2022 that retail cryptocurrency transactions would now be permitted. The Legislative Council of Hong Kong passed laws in early December 2022 that created the idea of virtual assets and required crypto service providers to obtain a license starting on June 1, 2023.
April saw the launch of six new spot exchange-traded funds (ETFs) in Hong Kong, trading on Ethereum (ETH) and Bitcoin. The new technology has been certified for Harvest Global Investments, Bosera, HashKey, and China Asset Management.
Foreign investors who meet local restrictions can buy the new ETFs and Hong Kong locals. They have to go through the Know Your Customer (KYC) process in particular. By being inclusive, this strategy may increase the number of clients and enhance the stability and liquidity of the Hong Kong ETF market.
Will the New Rules Ruin Hong Kong’s Efforts?
Hong Kong’s focus on investor protection and anti-money laundering measures may deter those calling for more stringent compliance requirements. Bosera, Harvest Global Investments, HashKey, and China Asset Management are the four firms that have received approval to implement the new technology.
Regulators are conducting several pilot programs to evaluate the possible advantages of cryptocurrencies and investigate associated uses. Furthermore, Hong Kong has steadily established itself as the nation most prepared for cryptocurrencies. In one way or another, Hong Kong will solidify its status as the world’s foremost Bitcoin hub by requiring cryptocurrency exchange licenses.