Bybit, a now popular Virtual Asset Trading Platform (VATP), has recently canceled the application to operate a business in Hong Kong. This move puts Bybit on a list of overseas-based firms that need more regulation approval. The exchange filed its application to the Hong Kong Securities and Futures Commission (SFC) on January 31, 2024, but officially pulled out on May 31, per the updated list observed on the SFC website.
As with other large platforms like Binance, Gate, and so on, Bybit has also adopted this approach to withdrawal. IO and HTX, some of which returned, rejected, or withdrew their applications. Some insiders suggest that the Hong Kong SFC will not quickly grant licenses to offshore exchanges even though an official statement has yet to be made.
Bybit Exits Hong Kong Licensing Process
The SFC also compiles a list of VATP applicants who have withdrawn their license application for one reason, submitted an incomplete application, have yet to be able to rectify fundamental errors, or withdrew their applications out of their own volition. Some of the most recent ones are Gate Digital Limited, which operates Gate. io, and OKX, who pulled out their applications on May 22nd, 2021, and May 24th, 2024, respectively.
The SFC also provides a list of the licensed Virtual Asset trading platforms. But, according to the regulator, they do not guarantee the performance or creditworthiness of those firms. Some of these include OSL Digital Securities and Hash Blockchain, which have had legal licenses in Hong Kong since 2020.
The recent pullout of Bybit’s application and the general tendency in which offshore-based trading platforms struggle to get licenses in Hong Kong may indicate a paradigm shift in the island’s regulatory approach. This is a new development that shows that the cryptocurrency industry is facing rising levels of regulation worldwide.
Bybit’s withdrawal of the license application proves there is increasing regulatory pressure on virtual exchanges in the Hong Kong region. With the regulation pressuring successful operationalization of the region, the fates of trading platforms in virtual assets remain unknown. This may make the other exchanges interested in venturing into the Hong Kong market pause a little in their decision.
