Hong Kong crypto investors and traders may lament the absence of renowned crypto exchanges, as their hopes for trading digital assets with world-renowned platforms like Binance, OKX, and Houbi were dashed at the last minute due to the withdrawal of their licensing applications. Out of 24 exchanges that applied for the licenses, only 11 exchanges are closer to getting licenses.
Some view this event as a setback to Hong Kong’s ambition to emerge as a leading force in Web3 and cryptocurrency, especially in light of several prominent crypto exchanges withdrawing their licensing applications with the Securities and Futures Commission (SFC).
User Restrictions: Culprit Behind Hong Kong Crypto Ambitions
The main reason behind these withdrawals appears to be the SFC’s stipulation that virtual asset trading platform applicants must exclude users from mainland China. This directive represents a formidable barrier for international exchanges with an entrenched Chinese user demographic.
Concerns Regarding Confusing Regulations and Deliberate Pace
Industry experts also highlight concerns about the licensing framework itself. The SFC’s policies governing VATPs, stablecoin issuance, and OTC trading, formulated by distinct departments, ostensibly lack a unified strategic blueprint. Additionally, the slow implementation of these regulations is seen as lagging behind the rapid development of Web3 technology.
Community Skepticism of Hong Kong’s Dedication
The exit of the major players such as Binance, Huobi, and OKX has raised doubts within the Hong Kong crypto community about Hong Kong’s commitment to Web3. Critics argue that the SFC’s cautious and conservative approach, focusing on more restrictions than innovation, diminishes the appeal of the licenses.
Prospects of Future Applications Amidst Persisting Obstacles
Although some entities that withdrew may reconsider applying with new legal structures, the prevailing obstacles cast a boubt on Hong Kong’s capability to attract leading crypto enterprises. The SFC’s position on user exclusions and its overarching approach to Web3 regulation will likely play a pivotal role in the ultimate realization of Hong Kong’s ambitions within this domain.
Also See: Chainlink Soars: Defying Downturn with 44% Growth