Gate.io and OKX, have decided to withdraw their applications for operational licenses in Hong Kong. This move comes in the wake of eight other firms, including those backed by Binance and HTX, also abandoning their efforts to obtain licensing from the Securities and Futures Commission (SFC) in Hong Kong. The SFC has only granted licenses to two exchanges in the region, namely OSL and HashKey, while applications from exchanges such as Crypto.com, Bullish, and Matrixport are still under review. In the article, it was mentioned that this trend of exchanges stepping back from licensing efforts could indicate a challenging regulatory environment in Hong Kong for crypto exchanges.

In a notice published on May 24, OKX HK revealed its decision to withdraw its application for a Virtual Asset Service Provider (VASP) license, stating that it would cease providing centralized virtual asset trading services to residents of Hong Kong by May 31, 2024. The exchange assured its customers that their funds were safe and that withdrawal services would not be affected, but advised against making deposits post-May 31 to avoid processing issues.

Similarly, Gate.io's Hong Kong unit announced on May 23 that it had also pulled out its application for a virtual asset trading platform license. The platform outlined a comprehensive strategy that included halting new user registrations, deposits, and marketing activities in Hong Kong, as well as delisting major tokens like Bitcoin, Polkadot, and Ethereum. Gate.io indicated that it would cease all trading services by May 28 and encouraged users to withdraw their assets before Aug. 28.

Gate.HK, which was launched in 2023, had submitted its license application to the SFC in February to comply with new regulations requiring exchanges serving Hong Kong customers to be licensed in the region. The decision to withdraw their application reflects the challenging regulatory landscape for crypto exchanges in Hong Kong, as observed in the broader industry trend of exchanges stepping back from licensing efforts.

The broader implications of these withdrawals from major exchanges like Gate.io and OKX could signal a cautious approach by crypto exchanges towards regulatory compliance in Hong Kong. With only two exchanges currently holding licenses in the region, the future regulatory environment for crypto exchanges in Hong Kong remains uncertain, prompting other exchanges to reconsider their licensing efforts and operational strategies in the region.