Gate.HK, a Hong Kong-based cryptocurrency exchange, has ceased operations after failing to meet the local licensing requirements that will come into effect on June 1. The Securities and Futures Commission of Hong Kong (HKSFC) mandated that all crypto exchanges in the region acquire an operational license, with those failing to apply required to stop services by May 31.

Gate.HK had submitted its license application to the HKSFC on February 28 but withdrew it on May 22, citing the need for a significant overhaul of its trading platform. As a result, the exchange has stopped acquiring new users and marketing activities as of May 23. Existing users are restricted to withdrawing funds only until August 28.

The exchange will permanently delist all tokens, including Bitcoin, Ether, Solana, Polygon, and Tether, among others, on May 28. Gate.HK plans to relaunch its services after reconstructing its platform to comply with Hong Kong's regulatory requirements, including establishing Anti-Money Laundering (AML) and counter-terrorism financing measures.

Before Gate.HK's exit, three other exchanges — Huobi HK, QuanXLab, and IBTCEX — also withdrew their license applications in May. In total, nine crypto exchanges have withdrawn their applications in Hong Kong. As of May 24, twenty cryptocurrency exchanges remain active applicants for Hong Kong's crypto license.

A recent Bloomberg report indicated that the HKSFC is considering allowing spot ETH exchange-traded fund (ETF) issuers to include an ETH staking option, enabling them to generate passive income. The SFC reportedly discussed providing staking services via licensed platforms with the country's crypto ETF issuers after fielding proposals in recent weeks.

The financial regulator is currently discussing the matter, and there is no set timeline for implementation. This development highlights the ongoing efforts of regulatory bodies to ensure that cryptocurrency exchanges operate in a secure and compliant manner, protecting users and maintaining the integrity of the financial system.