BitMart Joins Wave of Exits from Hong Kong’s Tough Crypto Licensing Regime
BitMart withdraws from Hong Kong’s strict VASP regime, becoming the 17th exchange to exit amid rising compliance costs.
Hong Kong’s experiment in creating one of the world’s most tightly regulated cryptocurrency markets is facing growing resistance from global exchanges. This week, BitMart became the 17th platform to withdraw its application for a Virtual Asset Service Provider (VASP) license, joining a list of firms unwilling or unable to meet the city’s increasingly stringent requirements.
The Hong Kong Securities and Futures Commission (SFC) confirmed that BitMart, a Cayman Islands–headquartered exchange, had formally withdrawn from the process on August 28. The move comes as regulators continue to reinforce rules around custody, capital requirements, and investor protections.
BitMart’s exit reflects a broader retreat by international players who once viewed Hong Kong as a potential hub for digital assets. Exchanges including OKX, Bybit, Gate.io, and HTX previously abandoned their applications, citing the financial and operational strain of compliance.
At present, only eleven platforms remain licensed under Hong Kong’s anti-money laundering and investor protection framework. These include early entrants like HashKey and OSL, as well as newer approvals such as PantherTrade, YAX, Bullish, and BGE.
The regulatory burden in Hong Kong is unusually heavy by global standards. To qualify, exchanges must maintain at least HK$5 million in paid-up capital, guarantee liquidity for 12 months of expenses, and place 98% of client assets in offline cold storage. Withdrawals can only be processed to pre-approved wallet addresses.
Insurance is compulsory: 100% coverage for hot wallets and 50% for cold storage, adding another costly barrier for exchanges. smart contract–based custody systems are explicitly banned, forcing some firms to rethink their core infrastructure.
The SFC’s latest circular, issued in mid-August, further tightened custody rules. Licensed operators must implement real-time monitoring via fully staffed Security Operations Centres, subject every transaction to air-gapped signing, and ensure custodians undergo regular audits. Employees must also receive ongoing training against phishing and blind-signing risks.
The business case for compliance is complicated by Hong Kong’s restricted retail trading list. At present, only four tokens — Bitcoin, Ethereum, Avalanche, and Chainlink — are approved for non-professional investors. For exchanges hoping to capture broader consumer demand, the limited scope significantly narrows growth opportunities.
While Hong Kong’s regulatory framework is widely seen as a gold standard for transparency and investor protection, it also imposes high barriers to entry that many global players find commercially unsustainable.
Supporters argue the system weeds out weaker operators and sets a strong precedent for safe digital asset trading. Critics counter that the city risks deterring innovation and pushing liquidity elsewhere in Asia.
BitMart’s withdrawal underscores the stark reality: in Hong Kong, survival as a crypto exchange now requires not just deep pockets but a wholesale re-engineering of business models. As the SFC continues to enforce one of the most exacting regimes worldwide, the question is whether Hong Kong’s market will consolidate into a small circle of compliant players — or see its ambitions eclipsed by more flexible jurisdictions.
