OKX Ends Services in Hong Kong, Withdraws License Bid

OKX, the second largest offshore crypto exchange, has ended its services in Hong Kong. This decision comes after OKX announced the withdrawal of its VASP license application for OKX HK. The company will stop providing services to Hong Kong residents by May 31.

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Despite this, OKX’s Web3 services, which include self-hosted wallets, will continue to be available to users in Hong Kong. OKX is the latest crypto exchange to join a long list of companies leaving the region due to struggles with following the SFC’s strict regulations.

OKX Users Can’t Make New Deposits

OKX’s statement to customers emphasized that funds are safe and withdrawal services will remain operational. However, users can only withdraw their assets from June 1. The company advises users not to make any new deposits into their OKX accounts after May 31, as these may not be automatically credited.

Any 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’s decision to withdraw its VASP license application is a necessary strategy. It reflects the challenges crypto exchanges face in meeting the stringent regulatory requirements in Hong Kong.

Hong Kong Changed Its Licensing Rules

The new mandatory licensing law for centralized exchanges in Hong Kong, which came into effect last June, demands significant compliance efforts and capital investments. Under these new rules, the Securities and Futures Commission (SFC) can send notices to firms not qualifying for an arrangement.

Also Read: OKX Launches Its Layer-2 Network X Layer

This acclaimed arrangement allows a platform to be considered licensed from June 1 while awaiting full approval. According to the regulator, firms that fail to qualify must shut down by May 31 or within three months of receiving notice from the SFC, whichever comes later.

Crypto Exchanges Have Been Leaving Hong Kong

Crypto companies have found meeting the SFC’s requirements difficult. So far, eight companies have withdrawn their applications, including those with ties to well-known global exchanges. For example, HKVAEX, backed by Binance, withdrew its application in March after filing in January and began winding down its operations.

Similarly, HBGL Hong Kong, an affiliate of HTX (formerly Huobi Global), withdrew its application last month for the second time after an earlier withdrawal and resubmission in February. Gate.HK, the Hong Kong arm of Gate.io, also withdrew its application for the virtual asset trading platform license.

This makes it the third company linked to a major global exchange to withdraw its bid to legally operate in Hong Kong under the new regime. The company stated it took a proactive step to withdraw its application as part of a “platform overhaul” and has stopped registering new users, taking deposits, and marketing its services in Hong Kong.

Cryptopolitan reporting by Jai Hamid