Crypto trading platform Bitget announced the closure of its Hong Kong division. The company will no longer pursue a Virtual Asset Trading Platform (VATP) license in Hong Kong, according to an announcement on domain BitgetX.hk.
Hong Kong has recently been recognized for its openness toward Bitcoin and the cryptocurrency market. However, it may not be the ideal target market for every exchange. It looks like regulations are chasing companies out of the market.
Upon exiting the market, BitgetX.hk website and services will also be shut down on December 13, 2023. The company advised customers to withdraw their virtual assets from BitgetX before the effective date as they will not be able to access their assets on BitgetX after that date.
Leaving Hong Kong
Bitget will stop onboarding new users and halt its trading services after November 13. So users can only withdraw their assets until the official closure date. The firm, however, noted that customer support is available to assist with any queries or concerns regarding the closure and the transfer of assets.
Hong Kong's new licensing regime went live on June 1 this year, which requires all centralized VA trading platforms to register with the Securities and Futures Commission (SFC) of Hong Kong. However, being eligible for a VATP license is not without challenge.
An exchange must meet a number of requirements, such as having a proven track record of compliance with other regulatory requirements and implementing robust risk management systems.
The SFC has a two-tiered licensing regime for VATPs. The first tier is for exchanges that trade in virtual assets that are not considered to be securities under the Securities and Futures Ordinance (SFO). The second tier is for exchanges that trade in virtual assets that are considered to be securities under the SFO.
Bitget has not publicly cited the reasons for its decision to permanently exit the Hong Kong market. However, market observers suggest that regulatory scrutiny may have made it more difficult for Bitget to operate in the country.
Despite the company's exit from Hong Kong, Bitget remains committed to expanding its global presence. The company is currently exploring opportunities in other markets.
Hong Kong to Revive Investment Immigration Program
Hong Kong has been increasingly tightening its regulations on cryptocurrency exchanges, especially after the recent crackdown on crypto exchange JPEX.
On September 13, the SFC warned against unlicensed virtual asset trading platform JPEX. The agency highlighted several suspicious aspects to the platform's advertising methods, which may violate the law.
By the time of warning issuance, JPEX's website promoted that its financial products, including ethereum (ETH), bitcoin (BTC), and tether (USDT), offered annual returns of 21%, 20%, and 19%, respectively.
Hong Kong is considering enabling spot crypto ETFs. In November 2023, Julia Leung, CEO of the Securities and Futures Commission (SFC) of Hong Kong, stated that the SFC is "open to proposals using innovative technology that boosts efficiency and customer experience." She added that the SFC is willing to "give it a try as long as new risks are addressed."
In addition, the SFC noted that some investors reported being unable to withdraw funds or experiencing account balance discrepancies.
Apart from regulatory scrutiny, Hong Kong is gearing toward fostering innovations. Local media outlets recently reported that the country's government is looking to resume the investment immigration program.
Chiu Ta-kan, a lawmaker from the technology and innovation community, is suggesting that the government should clarify the scope of assets that are eligible for the new investment immigration program.
He specifically mentions Bitcoin that is traded on licensed virtual asset exchanges as an example of an asset that should be considered a financial product and therefore eligible for the program.
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