HKVAEX, a cryptocurrency exchange based in Hong Kong and previously linked to Binance by Chinese state media, has officially withdrawn its application for an operational license from the Securities and Futures Commission of Hong Kong (SFC).
The withdrawal was confirmed by the SFC’s website, and it comes nearly three months after the initial application was filed on January 4, just ahead of the SFC’s February 29 deadline for all crypto exchanges operating in the region to apply for licenses.
As a result of withdrawing its application, HKVAEX is now required to cease its operations in Hong Kong by May 31. This development is part of a broader trend observed this year, with three other virtual asset trading platforms, including the globally recognized Huobi exchange, also retracting their license applications for undisclosed reasons.
Speculation within the crypto community, as voiced by Crypto Twitter influencer Wu Blockchain, suggests that these withdrawals could stem from various regulatory challenges, such as requests to change audit companies or provide additional information.
The confusion surrounding HKVAEX and another Hong Kong-based crypto exchange, VAEX, was highlighted, with an HKVAEX representative clarifying that VAEXC (another applicant) had no affiliation with HKVAEX. This clarification came amidst the background of Binance’s alleged connections to CommEx, a Russian crypto exchange that recently announced its shutdown and the cessation of deposits as of March 25.
Binance has distanced itself from HKVAEX and reiterated that HKVAEX is not part of Binance group. The global crypto exchange had previously signaled its intent to exit the Russian market following the resignation of key local executives and amidst escalating regulatory scrutiny.
Contrary to the stricter crypto regulations on the Chinese mainland, Hong Kong has been more welcoming to crypto firms. In June 2023, the city initiated its crypto licensing regime for virtual asset trading platforms, allowing licensed exchanges to provide retail trading services.
The Securities and Futures Commission (SFC) announced that all crypto trading platforms operating without having applied for a license must conclude their operations in the region by May 31, 2024.
The SFC has issued a directive to investors engaged with virtual asset trading platforms to prepare for migrating their assets to licensed entities or those that have submitted their applications for a license. As of now, OSL Digital Securities and HashKey Exchange are the only two operators formally licensed by the SFC, having received their approvals on December 15, 2020, and November 9, 2022, respectively.
In total, the regulator disclosed that 22 crypto trading platforms had applied for operational licenses under the new regulatory framework, including four exchanges initially under the SFC’s optional regime for crypto trading platforms. However, four exchanges — Huobi HK, Meex, BitHarbour, and Ammbr — either withdrew their applications or had them returned by the SFC.
