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Cryptocurrency trading platform HTX, formerly Huobi Global, has recently stunned the crypto community with its withdrawal of its licence to operate in Hong Kong. This retreat symbolizes a clear change from its previous plan to boost its presence within the local crypto market.
According to the Securities and Futures Commission (SFC), the withdrawal of the application was for HBGL Hong Kong Limited, which is under the umbrella of Hong Kong’s HTX, on the 23rd of February only three days after the submission of the application.
What led to the withdrawal of the application?
HTX’s abandonment of the license application program gave rise to scepticism among the crypto community as HTX was one of the key contenders in the race to acquire regulatory approval in Hong Kong. The unexpected reversal of its intentions, without providing the public with the reasons, provoked the industry stakeholders to speculate about the factors that led to the cancellation of the project.
A couple of months ago, HTX’s advisor Justin Sun tweeted that the company was considering a license in Hong Kong which generated a lot of buzz in the industry. It was expected that the establishment of the Huobi in Hong Kong would allow it to penetrate the favourable crypto market in Hong Kong in the long run.
Hong Kong’s new regulatory regime for virtual assets
Last year, the city’s new regulatory regime was put in place and it stipulates the rigid new demands for companies selling or any marketing about the cryptocurrencies for the locals. Nevertheless, the withdrawal of the licence application days before the deadline significantly shows the conformity and regulatory obstacles facing cryptocurrency business operators within Hong Kong.
The attraction of the Hong Kong market, marked by its proximity to mainland China and its status as a global financial hub is not without its complications to international crypto companies.
This surprising step by HTX is the highlight of the complex regulatory system cryptocurrency firms are battling with on the international level. Along with the industry striving to get clarity on regulations, this decision showcases the need for more enacted and executed rules to support virtual assets in Hong Kong and eventually in other parts of the world.