As Hong Kong positions itself as a “goldrush” for crypto firms, the regulators are enacting stringent rules to protect the consumers’ interest. In a May 24 report the Hong Kong-headquartered crypto exchange Gate.HK announced plans to cease operations in the region.
The Gate.HK stated that the changes in the regulatory framework for digital assets challenged the crypto exchange to make the difficult decision to conform with the law.
Hong Kong Implements New Licensing Regulations
The Gate.HK confessed that it failed to meet the deadlines for the new licensing requirement. A review of the new licensing regimes demonstrated that local and foreign crypto firms must acquire an operational license from the Hong Kong Securities and Futures Commission (SFC).
The regulators stated that, from June 1, all crypto firms should have an authorized license to operate in the region. Failure to obtain the permit by May 31 will subject the crypto exchange to legal charges.
To avoid breaching the new rules, the Hong Kong crypto firms will opt to cease operations to comply with the licensing rules. A report from a Gate.HK representative reveals that the crypto exchange submitted its licensing application on February 28.
Citing the changes in the crypto industry, the representative confessed that on May 22, the Gate.HK withdrew the application to address a significant overhaul of its trading platform. The Gate.HK will be among the crypto exchanges that will cease operation from June 1.
Gate.HK Winds Down Operations
The Gate.HK team stated that closing down will only affect specific businesses. The crypto exchange confirmed that customers can no longer deposit or withdraw their until August 28.
The Gate.HK will no longer be accepting new users or proceeding with marketing activities. Moreover, the crypto exchange will delist all the tokens on Gate.HK trading platform from May 28. This implies that Bitcoin, Ethereum, Solana, Polygon, Tether, and other tokens will not be available on the Gate. HK.
In the meantime, the crypto exchange will prioritize completing the licensing registration to comply with the law. The Gate.HK team intends to invest in restructuring the trading platform to uphold its compliance with the regulation.
To operate compliantly, the Gate.HK plans to implement adequate anti-money laundering and counter-terrorist financing measures. The company explained that the restructuring would involve thoroughly maintaining the Gate.HK trading platform.
The crypto exchange anticipates that after completing the proposed overhaul of the Gate.HK team will resume operations. Also, the crypto exchange vows to contribute to building the virtual assets ecosystem once it resumes operations.
Major Crypto Exchanges Exit Hong Kong Market
The winding down of Gate.HK’s operation coincides with OKX’s recent exit from the Hong Kong market. On May 24, the OKX team confirmed plans to shut down its Hong Kong trading platform by the end month.
The OKX team assured the Hong Kong users that their funds would remain untouched during the closure of business. The OKX users were advised to withdraw their funds from May 31.
The departure of OKX and Gate.HK ignited heated debates among the Hong Kong crypto community. Earlier this month, the SFC hinted that Huobi HK, IBTCEX, and QuanXLab had withdrawn their licensing application.
The withdrawal of licensing applications by leading crypto exchanges demonstrated the unwillingness of companies to conform to the new laws.
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