By BitMart won’t pursue a virtual asset service provider license in Hong Kong, which has emerged as one of the most strictly regulated markets for crypto exchanges.
As of August 28, the Cayman Islands-headquartered platform has been added to the Hong Kong Securities and Futures Commission’s list of applicants whose license applications have either been returned or withdrawn.
BitMart becomes the 17th cryptocurrency exchange that has dropped plans to comply with Hong Kong’s cryptocurrency regulations, adding to a quiet but steady exodus of firms backing away from what is now considered one of the most demanding crypto jurisdictions globally.
Hong Kong keeps the crypto market in check
The exit comes just weeks after fresh regulatory updates tightened the screws further on licensing conditions, particularly around asset custody, capital requirements, and operational transparency.
For BitMart, the decision to withdraw was likely due to the growing cost of navigating Hong Kong’s compliance landscape
While the exchange has not offered a public statement, its move follows a pattern seen among several applicants who either underestimated the scale of the regulatory demands or reconsidered the commercial viability of operating under such tight restrictions.
Hong Kong regulators demand a structural overhaul for those looking to operate.
To even be considered, exchanges must maintain paid-up capital of at least HK$5 million and prove they have enough liquid assets to cover 12 months of operating expenses.
Platforms must also demonstrate secure cold storage infrastructures and hold 98% of client assets offline.
As an additional layer of security, exchanges can only process withdrawals to pre-approved wallet addresses.
Insurance is mandatory in Hong Kong, 100% for hot wallets, and 50% for cold ones.
Key management must be airtight, and smart contract-based cold storage systems are outright banned.
For some platforms, especially those not originally designed to operate under such conditions, the regulatory weight may simply be too heavy.
Hong Kong tightens mandates for custody
In mid-August, the SFC issued a new circular tightening its rules on custody.
Licensed platforms now face stricter scrutiny on their wallet infrastructure, must vet third-party providers with the same diligence as internal systems, and are expected to run real-time threat monitoring via fully staffed Security Operations Centres.
Some of the key mandates involve every wallet transaction going through air-gapped signing, every custodian being audited periodically, and every staff member being trained against phishing attacks and blind signing.
Limited options for retail traders
And for exchanges hoping to attract local traders, the scope of business is also sharply defined.
As it stands, only four crypto assets, Bitcoin, Ethereum, Avalanche, and Chainlink, are approved for retail trading.
That means a platform’s entire retail strategy must align with a limited set of tokens.
Previously, OKX, Bybit, Gate.io, and HTX also withdrew their applications earlier, some within days of the June 1, 2024, deadline that ended the grace period for unlicensed exchanges.
For many of those applicants, the SFC had already raised red flags, pointing to cybersecurity deficiencies, weak internal controls, or insufficient governance frameworks.
As of now, eleven trading platforms have received operational licenses under the city’s anti-money laundering framework.
PantherTrade and YAX were the first to be approved in January 2025, followed by Bullish and BGE.
They join early entrants like HashKey and OSL, forming a slowly growing but tightly regulated cohort.
These firms now operate under a unified compliance standard that few jurisdictions globally can match.
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