Crypto Company HTX Failed To Get Permission From Hong Kong Government, Here's Why!

HTX crypto exchange does not get permission to operate in Hong Kong. (Photo; Doc. Arzdigital)

JAKARTA - HTX, a leading crypto exchange, failed to obtain a virtual asset trading license (VATP) from the Hong Kong government. The exchange withdrew its application just two days before the deadline set by Hong Kong's financial regulator, the SFC.

VATP licenses are mandatory requirements for all crypto exchange platforms that wish to operate legally in Hong Kong. These licenses aim to protect investors from the frequent security risks, fraud and money laundering in the crypto industry.

Currently, there are only two crypto exchanges that have obtained VATP licenses, namely HashKey and OSL. Meanwhile, about 18 other crypto exchanges are still awaiting approval from SFC, including HTX, formerly known as Huobi.

HTX is a crypto exchange from China that has been operating since 2013. The exchange has a daily trading volume of more than $1 billion and offers more than 600 crypto pairs to be transacted. HTX also has its own governance token, namely HTX, which is currently ranked 25th in the CoinMarketCap list.

HTX has big plans to expand its business in Asia, especially in Hong Kong, which is considered one of the world's leading financial and crypto centers. HTX CEO Justin Sun once stated that he wanted to move his headquarters to Hong Kong and establish Huobi Hong Kong as a subsidiary of HTX.

China's dominance in the crypto space is increasingly visible. With this, I have decided to move to Hong Kong to be closer to action and take advantage of opportunities in the Asian market," Sun said in January 2024.

However, the plan did not appear to have gone smoothly. On February 23, 2024, HTX submitted a VATP license application to the SFC, but then withdrew it back on February 25, 2024, without explaining the reasons behind the decision. Neither Sun nor HTX representatives have made an official statement on this matter.

Some analysts speculate that HTX may face difficulties in meeting the requirements and standards set by the SFC, which is known to be very strict and comprehensive. In addition, HTX may also be worried about the negative impact of the new regulation to be imposed by the SFC on June 1, 2024.

The new regulation requires all crypto exchange platforms that want to do business in Hong Kong to have a VATP license, or face legal sanctions in the form of fines and prisons. This regulation also prohibits crypto exchange platforms from serving investors from mainland China, which is the main market for HTX.

With HTX's withdrawal from the VATP license competition, chances for other crypto exchanges to get the license may be even greater. Some of the crypto exchanges that are reportedly applying for VATP license include OKX, Gate.io, and Bitfinex.