Binance Hong Kong affiliate HKVAEX shuts down operations after withdrawing crypto licence application

The Binance-affiliated cryptocurrency exchange HKVAEX is shutting down its operations in Hong Kong after withdrawing its application for a licence in the city, ending a bid that lasted just three months.

In the company's official group chat on the messaging platform Telegram, HKVAEX head of operations Walton Chan announced the closure and said users should withdraw their assets by April 30. The website will shut down on May 1, the company said its official announcement, and trading services will end on April 5. Deposits and new user registrations have already been suspended.

The exchange is winding down operations less than two months after former CEO Stanley Fung left the company. Fung said he is "not privy to the details surrounding their recent decision". He did not say why he decided to leave the company.

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HKVAEX did not respond to requests for comment.

The closure comes just over a year since the company launched its virtual asset trading platform (VATP) in February 2023, securing its position as a pre-existing service provider so that it would have a one-year window to apply for a licence after a new regulation from the Securities and Futures Commission (SFC) took effect in June. The exchange submitted its application in January, well ahead of the February 29 deadline, but the SFC's website shows that it was withdrawn on March 28.

The company's ties to Binance have raised questions about whether it would be able to successfully secure a licence, especially after the crypto giant was found guilty of breaking US anti-money-laundering laws.

The Post reported last October that Binance was behind HKVAEX, which was set up as a separate entity in Hong Kong and shares digital resources with the world's largest crypto exchange. Binance has said that HKVAEX is "not in the Binance Group of companies".

Its retreat from the market leaves Binance as the only major crypto player founded in China that does not have an affiliate or subsidiary pursuing a VATP licence in Hong Kong. The Hong Kong entity under OKX submitted an application last November and Huobi HK, under HBGL Hong Kong, submitted in February.

HTX, formerly Huobi, said Huobi HK operates independently. Before taking over as head of HKVAEX, Fung was CEO of Huobi HK.

The Post previously found that HKVAEX and Binance were sharing digital resources. Photo: HKVAEX, Binance alt=The Post previously found that HKVAEX and Binance were sharing digital resources. Photo: HKVAEX, Binance>

HKVAEX did not give a reason for deciding to shut down before the SFC's application process had concluded. Beyond its ties to Binance, though, VATP operators have expressed concerns about the high compliance costs for getting a licence in Hong Kong, in addition to requirements such as cold storage reserves that are even greater than what is required in neighbouring markets like Singapore.

Still, Fung said he remains "highly optimistic" about the city's Web3 industry. "I continue to see Hong Kong as a future hub for these technologies and I'm excited about the opportunities this presents," he said.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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