Gate.io’s Hong Kong entity, Gate.HK, is winding down its operations and has withdrawn its application for a crypto trading platform license in the region. In a statement released on Wednesday, Gate.HK outlined a platform overhaul and urged users to withdraw their assets by August 28. The platform will no longer accept new users or deposits and plans to delist all cryptocurrencies by May 28. Gate.HK mentioned potential development of new services and products in the near future and may resume regional operations at some other point.
Hong Kong’s Securities and Futures Commission (SFC) plans to only allow licensed crypto exchanges to service customers from June 1. After closing the application portal in February, the SFC set a strict deadline of May 31 for non-compliant exchanges to shut down. The SFC will reveal which platforms have secured licenses through a public register on June 1. Major digital asset platforms like Crypto.com, OKX, HKVAX, and Bullish are working to meet Hong Kong’s new licensing requirements, including risk profiling, insurance, asset custody measures, and limits on the types of tokens allowed for trading.
Gate.HK had submitted an application for a license with the SFC in February 2024 but withdrew it on May 22. Neither Gate.io nor the SFC have publicly disclosed the reason behind this withdrawal. Huobi HK, the Hong Kong subsidiary of HTX, also withdrew its application for a crypto trading license for the second time, raising concerns about its ability to operate legally in the region. The exits of Gate.HK and Huobi HK add to the uncertainty surrounding unlicensed exchanges in Hong Kong as the deadline for compliance approaches.
Gate.io’s decision to wind down its operations in Hong Kong and withdraw its application for a crypto trading platform license comes at a time when the SFC is implementing new regulations for the sector. Major digital asset platforms are making efforts to meet the SFC’s requirements for licensing, including risk profiling, insurance, and custodial measures. Gate.HK’s withdrawal raises questions about the challenges faced by unlicensed exchanges in Hong Kong and the implications of failing to comply with the regulatory framework.
The closure of Gate.HK and the withdrawal of its license application highlight the complexities and challenges faced by cryptocurrency exchanges in complying with evolving regulatory requirements. The SFC’s deadline for non-compliant exchanges to shut down by May 31 has prompted many platforms to seek licensing or exit the market. The decisions by Gate.io and Huobi HK to withdraw their applications raise concerns about the legal feasibility of operating in Hong Kong without the required licenses.
As the cryptocurrency landscape continues to evolve, regulatory compliance is becoming increasingly important for exchanges operating in jurisdictions like Hong Kong. The exits of Gate.HK and Huobi HK underscore the need for platforms to adhere to regulatory guidelines to maintain their operations. The SFC’s mandate for only licensed exchanges to service customers from June 1 signals a shifting landscape for cryptocurrency exchanges in Hong Kong, with major players working to meet the new licensing requirements to ensure continued operation within the region.
