Several exchanges have withdrawn their cryptocurrency license applications, and after actual testing, it is found that Hong Kong users can still register on unlicensed platforms. Exchanges operating compliantly within Hong Kong face unfair competition.
Investigation Results on International Exchanges
According to actual testing and reports by “Hong Kong 01,” investigations were conducted on international platforms such as Binance, OKX, and Bybit that were supposed to exit the Hong Kong market. The results show that these platforms are still operating in Hong Kong, allowing registration with local IP addresses and Hong Kong ID cards. Some platforms claim not to be open to Hong Kong residents but accept registration using mainland ID cards in Hong Kong.
Regulations and Current Status from the SFC
By May 31, 2024, any virtual asset trading platform operating in Hong Kong must obtain a license if they have not submitted an application to the SFC by February 29, 2024. On May 31, Bybit and many other exchanges withdrew their license applications in Hong Kong, ceasing operations in accordance with regulations. Withdrawing license applications may lead these exchanges to lose their legal operating qualifications, exposing users to legal and security risks.
Testing Results
Through actual testing in Hong Kong, it was found that registration with a Hong Kong phone number is still possible for some unlicensed trading platforms, even bypassing Hong Kong IP restrictions using VPN. Binance allows registration directly with a Hong Kong phone number without the need for a VPN. OKX requires email and phone verification, still allowing registration with Hong Kong phone numbers without a VPN. Bybit’s usage in Hong Kong is restricted by IP; registration cannot be completed with a Hong Kong phone number even with VPN. Bitget and Gate also face registration issues with Hong Kong phone numbers.
Unfair Competition in the Market
Compliant exchanges like OSL and HashKey are experiencing unfair competition in the market due to the situation described above. They have invested significant resources to comply with the SFC’s strict regulatory standards, weakening the business interests of legally operating exchanges and damaging market order.
Legal expert Yu Peiheng previously pointed out two consequences of operating unlicensed platforms in Hong Kong: they are prohibited from conducting operations in Hong Kong and from actively promoting the platform to Hong Kong residents. However, it is legally allowed for Hong Kong residents to open accounts and trade on overseas exchanges.
There is a gap in the regulation and enforcement of licensed and unlicensed trading platforms under current laws, allowing unlicensed platforms to easily continue operations in Hong Kong by circumventing regulatory requirements. This puts compliant licensed exchanges at a disadvantage, reflecting a situation where “honest people suffer.”