OKX, the second-largest offshore cryptocurrency exchange, has announced its decision to discontinue services in Hong Kong by May 31, 2024. This move comes after the company withdrew its VASP license application for OKX HK, citing difficulties in complying with the region's stringent regulatory requirements. Despite this, OKX's Web3 services, including self-hosted wallets, will remain accessible to users in Hong Kong.

The Hong Kong Securities and Futures Commission (SFC) has implemented a new mandatory licensing law for centralized exchanges, effective since June 2023. This law demands significant compliance efforts and capital investments from exchanges. The SFC can issue notices to firms that fail to qualify for an arrangement, requiring them to shut down by May 31 or within three months of receiving the notice, whichever comes later.

OKX's decision to withdraw its VASP license application reflects the challenges faced by crypto exchanges in meeting Hong Kong's regulatory requirements. The company has assured customers that their funds are safe and withdrawal services will remain operational. However, users are advised not to make new deposits into their OKX accounts after May 31, as these may not be automatically credited. Open orders not closed by this date will be canceled, and the resulting funds will be transferred to the user's OKX account balance. Customers can withdraw their assets to self-custody wallets or other third-party platforms until August 31, 2024. After this date, any remaining balances will be considered unclaimed property and treated according to the company's terms of use.

OKX is the latest crypto exchange to leave Hong Kong due to regulatory pressures. Eight companies, including those linked to well-known global exchanges, have withdrawn their applications. For instance, HKVAEX, backed by Binance, withdrew its application in March, while HBGL Hong Kong, an affiliate of HTX (formerly Huobi Global), withdrew its application last month. (link unavailable), the Hong Kong arm of (link unavailable), also withdrew its application for the virtual asset trading platform license. These withdrawals highlight the difficulties faced by crypto companies in meeting the SFC's requirements.

The SFC's new rules have led to a decrease in the number of crypto exchanges seeking operational licenses in Hong Kong. Three exchanges, IBTCEX, QuanXLab, and Huobi HK, withdrew their applications in May. Currently, 21 crypto exchanges are still in the process of obtaining a license, including prominent global players like Bybit, (link unavailable), Matrixport HK, HKX, and OKX. The Hong Kong Monetary Authority (HKMA) has also launched a pilot program for the digital yuan, marking the first deployment of the CBDC outside of mainland China.

In conclusion, OKX's decision to discontinue services in Hong Kong reflects the challenges faced by crypto exchanges in meeting the region's stringent regulatory requirements. The SFC's new rules have led to a decrease in the number of exchanges seeking operational licenses, with several companies withdrawing their applications. Despite this, OKX's Web3 services will remain accessible to users in Hong Kong, and the company has assured customers that their funds are safe and withdrawal services will remain operational.