Regulatory pressure forces Hong Kong cryptocurrency exchange to shut down

Gate.HK, a cryptocurrency exchange based in Hong Kong, has shut down due to its failure to meet the upcoming local licensing requirements. Starting from June 1, the Hong Kong Securities and Futures Commission (SFC) has mandated that all crypto exchanges in the region must obtain an operational license. Failure to do so means that exchanges must cease their services by May 31. In response to this requirement, Gate.HK submitted its license application to the SFC on February 28. However, on May 22, the exchange withdrew its application, stating the need for a “major overhaul” of its trading platform.
As of May 23, Gate.HK has stopped all activities related to acquiring new users and marketing. Existing users are now unable to make deposits and can only withdraw funds until August 28. On May 28, Gate.HK will completely shut down its trading platform and permanently delist all tokens, including Bitcoin (BTC), Ether (ETH), Solana (SOL), Polygon (MATIC), and Tether (USDT), among others. The exchange plans to relaunch its services once it has reconstructed its platform to comply with Hong Kong’s regulatory requirements, which include implementing Anti-Money Laundering and Counter-Terrorist Financing measures.
Gate.HK’s closure comes shortly after the announcement of another major global exchange, OKX, withdrawing from Hong Kong on May 24. OKX will no longer provide centralized virtual asset trading services to Hong Kong residents by May 31, 2024. Prior to Gate.HK’s exit, three other exchanges, namely Huobi HK, QuanXLab, and IBTCEX, also withdrew their license applications in May.
In related news, the Hong Kong SFC is reportedly considering allowing spot Ether exchange-traded fund (ETF) issuers to include an ETH staking option, which would enable them to generate passive income. The SFC has been discussing this matter with crypto ETF issuers, but there is currently no set timeline for implementation.