Crypto exchange Gate.HK closes doors due to failure to meet licensing requirements

Hong Kong-based cryptocurrency exchange Gate.HK has announced it will cease operations after failing to meet local licensing requirements that come into effect from June 1.

Crypto exchanges must obtain an operational license

The Securities and Futures Commission of Hong Kong (HKSFC) has determined that all crypto exchanges in the region must obtain an operating license. Exchanges that have not applied for a permit must stop their services before May 31.

Gate.HK submitted a license application to the HKSFC on February 28, but withdrew it on May 22, citing the need for a “major overhaul” of its trading platform. As of May 23, Gate.HK stopped all activities related to new user acquisition and marketing. Existing users will no longer be able to make deposits and will be limited to withdrawing funds until August 28.

The final closure of Gate.HK’s trading platform will take place on May 28, with all tokens permanently deleted. The list of tokens included Bitcoin, Ethereum, Solana, Polygon and Tether.

Gate.HK is going to reconstruct

Gate.HK has said it plans to relaunch its services after rebuilding its platform to meet Hong Kong regulatory requirements. These requirements include measures to combat money laundering (AML) and the financing of terrorism. The company stated: “Gate.HK is actively working on the aforementioned overhaul. We plan to resume operations in Hong Kong in the future and contribute to the virtual asset ecosystem after obtaining the relevant licenses.”

In addition to Gate.HK, three other exchanges – Huobi HK, QuanXLab and IBTCEX – also withdrew their license applications in May. A total of nine crypto exchanges have withdrawn their applications in Hong Kong. As of May 24, twenty cryptocurrency exchanges are still active and applying for Hong Kong’s crypto license.

A recent Bloomberg report shows that the HKSFC is considering offering issuers of spot ETH exchange-traded funds (ETF) an ETH staking option, allowing them to generate passive income. The financial regulator is currently discussing this issue and there is no set timetable for implementation.