Eleven platforms including HKbitEX, PantherTrade, Accumulus, DFX Labs, Bixincom, xWhale, YAX, Bullish, Cryptocom, WhaleFin, and Matrixport HK, were determined to be eligible for licensing as crypto exchanges in Hong Kong, according to information released by the SFC. The announcement comes as an aftermath of Hong Kong regulators giving exchanges a deadline of June 1 to apply for the licensing.
Only Cryptocom appears to have been accepted among the well-known offshore exchanges. OKX Bybit Gate HTX Binance and others have reportedly withdrawn their applications.
Crypto Activities in Hong Kong See Steady Rise
Hong Kong offers a doorway to access wealth from China's mainland in conventional markets. Yet, mainland investors do not have easy access to Hong Kong's cryptocurrency exchanges or exchange-traded funds (ETFs), and Beijing has outlawed the trading of digital assets.
Chinese nationals are thought to be evading the cryptocurrency prohibition, either by transferring money abroad or looking for alternative assets in the face of declining property values. Demand has been fueled by Bitcoin's fourfold increase since the beginning of 2023. The cryptocurrency exchange sector has a troubled history of functioning in the murky area, if not worse. Among the largest frauds in US history was the collapse of FTX. After entering a guilty plea to breaking US anti-money-laundering and sanctions laws in November, Binance was assessed a record $4.3 billion fine.
Today's move is consistent with recent measures implemented by Hong Kong authorities. The licensing will help better regulate the market in a set up where illegal transactions are prone to take place. The Hong Kong Monetary Authority (HKMA) has been focusing on illicit over-the-counter (OTC) services since the start of the year because they believe Chinese citizens utilize these platforms to get around restrictions on overseas transfers.
Hong Kong can keep its cryptocurrency laws because it adheres to the "one country, two systems" concept even though it is a part of China. Hong Kong continues to allow cryptocurrency activity, despite mainland China's severe restriction on any private party coin issuance since 2021. Chainalysis estimates that between July 2022 and June 2023, the OTC market contributed significantly to the $64 billion total amount of transactions that occurred in Hong Kong.
