Binance-Linked HKVAEX Shuts Down, Withdraws Hong Kong License

HKVAEX, a cryptocurrency exchange linked to Binance, the world’s largest crypto exchange, has decided to withdraw its application for a virtual asset trading platform license from the Hong Kong Securities and Futures Commission (SFC).

The surprise decision comes amidst a past deadline set by the Hong Kong securities regulator, requiring crypto exchanges and firms to apply for licenses by February 29. A failure to comply would require them to liquidate their businesses and exit.

HKVAEX Formally Quits

HKVAEX, which operates under its company name BX Services Ltd, formally withdrew its application for the virtual asset trading platform license. The withdrawal was confirmed by its listing on the SFC website among companies whose license applications have been returned, refused, or withdrawn. The withdrawal occurred on Thursday, March 28, resulting in speculation about the underlying reasons behind the action.

Although the real reasons for the withdrawal remain unclear, some have speculated it could be related to requests to change the audit company, insufficient documentation, or other undisclosed factors. HKVAEX submitted its license application on January 4 to the SFC which indicates its initial intent to operate as a licensed crypto exchange in Hong Kong.

Hong Kong’s Regulation and Crypto

There have been some changes in Hong Kong’s regulatory environment for crypto exchanges with the February 29 deadline, one of the crucial milestones. The regulatory authority was clear that any platforms failing to comply with licensing requirements are expected to cease operations by the end of May.

Experts say it is a reflection of Hong Kong’s commitment to ensuring regulatory oversight. Interestingly, in 2022, Hong Kong was adjudged the most crypto ready nation globally given its digital asset regulations and taxations rules, the number of blockchain startups, the number of crypto ATMs, amongst other indices.

Binance’s Influence and Regulatory Scrutiny

Although reports, based on anonymous insider tips from the South China Morning Post suggest that Binance may have played a role in the establishment of HKVAEX, the company has consistently maintained its independence from Binance. HKVAEX, which commenced operations in February 2023, has also denied any direct affiliation with the global exchange giant.

The recent guilty plea by Binance founder Changpeng Zhao to US anti-money-laundering laws has raised concerns among regulators, including SFC Licensing Head Elizabeth Wong. Zhao resigned as the chief executive of Binance following a series of investigations that culminated in an agreement with the Department of Justice (DoJ).