Hong Kong’s ambitions to become the most-desired destination for Web3 and crypto seem to be taking a backseat as some of the top global exchanges have withdrawn their licensing applications from Hong Kong’s Securities and Futures Commission (SFC).
Global Exchanges Withdraw from Hong Kong
As per the local news report, some of the top global exchanges like Binance, Huobi, and OKX have decided to withdraw their application during the last week of May. A total of 11 exchanges have withdrawn their applications leaving only 11 applicants on the list.
The Hong Kong SFC mandates that all applicants for virtual asset trading platform licenses sign a letter of commitment, ensuring they do not have mainland Chinese users in any region. This requirement poses a significant challenge for traditional offshore exchanges. OKX attempted to form an industry alliance to contest this stipulation but was ultimately unsuccessful.
Some of the industry insiders noted that the withdrawn entity could revise its legal entity or framework and reapply in the future. However, it should not use a brand similar to that of offshore exchanges in its application.
Are HK’s Web3 Ambitions Over?
With OKX exiting Hong Kong, many in the crypto community have started questioning whether Hong Kong’s Web3 ambitions are over.
Several individuals in Hong Kong’s WeChat circles have accused the authorities of timidity and excessive caution when implementing the new system. They argue that the authorities’ conservative and risk-averse approach, rooted in traditional financial thinking, has weakened the competitiveness and flexibility of the licenses. Consequently, some operators decided to withdraw their applications at the final stage, despite having invested substantial resources and upfront costs.
The author noted several areas of concern with the new licensing system. Firstly, various policies and measures related to the development of Hong Kong’s virtual asset market—such as VATP, stablecoin issuance, and virtual asset over-the-counter trading—were designed by different departments without cohesive strategic considerations for industrial development.
These policies entered the consultation stage or legislative process at different times, leading to a phased completion of the entire Web3 layout. This protracted process has struggled to keep pace with the rapid evolution of technology.
Read More: Here’s Why Binance, OKX Withdew Licensing Applications In Hong Kong