Several global exchanges have decided to withdraw their license applications in Hong Kong, pointing out flaws in the licensing system, according to a recent report. A member of the Legislative Council in Hong Kong, Duncan Chiu, expressed his dissatisfaction with the strict requirements for cryptocurrency exchanges, claiming that these regulations have discouraged well-known international exchanges from establishing offices in Hong Kong and have undermined investor confidence.
Chiu argued in an opinion piece published in the Hong Kong Economic Journal that the recent withdrawal of license applications by numerous global crypto exchanges has eroded market participants’ trust in Hong Kong’s efforts to develop Web3. He further highlighted that if cryptocurrency exchanges fail to apply for a license by February 29th, they will be required to leave Hong Kong by May 31st, as stated by the Securities and Futures Commission. Starting from June 1st, all Virtual Asset Trading Platforms (VATPs) operating in Hong Kong will be required to hold a valid SFC license or be granted “deemed-to-be-licensed” status.
Consequently, several international exchanges, including OKX, Gate.io, and HTX, have withdrawn their license applications in Hong Kong. Chiu emphasized that these withdrawals have brought attention to significant flaws in the current licensing system.
Chiu also pointed out that while various departments in Hong Kong are involved in formulating regulations for the virtual asset market, there is a lack of comprehensive strategic planning for the industry as a whole. He stated that some license applicants have expressed their concerns to him, stating that the authorities are not forward-thinking enough to foster the development of next-generation fintech. Furthermore, they argued that promoting Web3 from a traditional finance perspective restricts its adaptability and flexibility.
Chiu criticized the strict standards set by the SFC for Web3, deeming them “excessively stringent” as they are comparable to those imposed on traditional financial institutions.