BitMart pulls Hong Kong VASP bid as regulatory heat intensifies

The BitMart Hong Kong VASP application has been formally withdrawn, signaling another major setback for the city’s push to become a global crypto hub.

The move, confirmed by the Securities and Futures Commission (SFC) on Thursday, follows a string of high-profile exits by Bybit, OKX, and Gate.io as exchanges recoil from Hong Kong’s stringent licensing regime.

“Hong Kong has set some of the toughest licensing rules in the world,” — Adrian Lai, managing director of Newman Capital, told the South China Morning Post. “While that builds investor protection, it also narrows the field of who can realistically compete here.”

Stringent requirements for crypto platforms

The withdrawal of the BitMart Hong Kong VASP application underscores the financial and operational burdens imposed by the city’s regime. Centralized exchanges must demonstrate liquid assets equivalent to 12 months of operating expenses and maintain paid-up share capital of at least 5 million Hong Kong dollars ($641,490).

Additional safeguards include:

• 98% of client assets stored in cold wallets
• Transfers limited to whitelisted addresses
• Mandatory insurance covering 100% of hot storage and 50% of cold storage
• Strict internal controls over key management

The SFC further tightened oversight in 2025 by banning reliance on smart contracts for cold wallet management. New custody rules adopted earlier this month added further obligations, signaling regulators’ intent to leave little room for compliance gaps.

“Licensing in Hong Kong is not just about a stamp of approval — it is about restructuring your entire operational model around investor safety,” — Clara Chan, former deputy chief executive of the Hong Kong Monetary Authority, said during a recent fintech forum.

Hong Kong’s push to balance growth and control

Despite the retreat of several global exchanges, Hong Kong’s strategy is not collapsing. Four platforms which are PantherTrade, YAX, Bullish and BGE have so far secured operational licenses, with seven others listed as licensed entities.

The government has also moved to build out a stablecoin framework, finalized by the Hong Kong Monetary Authority earlier this month. The rules require stablecoin issuers to meet high capital and custody standards, leading to short-term losses among local firms but signaling Hong Kong’s determination to enforce robust oversight.

Officials argue that these steps are essential to win institutional trust and distinguish Hong Kong from less regulated jurisdictions.

“We aim to create a secure environment where digital assets can grow responsibly,” — SFC spokesperson, in a statement earlier this month.

Implications for global exchanges

The BitMart Hong Kong VASP application withdrawal, alongside similar retreats, illustrates the dilemma now facing global crypto exchanges: whether to embrace highly regulated jurisdictions such as Hong Kong or to focus on markets with lighter oversight but far greater legal uncertainty.

For Hong Kong, the string of withdrawals poses a reputational challenge. On one hand, the departure of well-known platforms could be interpreted as a setback to its ambition of becoming Asia’s premier crypto hub. On the other, officials argue that the exits reinforce the city’s credibility by demonstrating that only firms capable of meeting stringent standards will be allowed to operate.

“This is a classic quality-versus-quantity debate,” said Joseph Chan, adjunct professor of finance at the Chinese University of Hong Kong. “If the firms that remain can prove resilient under strict rules, Hong Kong could set a precedent for global best practice.”

For exchanges like BitMart, the retreat underscores a more complex strategic calculation. Maintaining a presence in Hong Kong offers access to a sophisticated investor base, proximity to mainland China’s financial system, and reputational value as a licensed entity in one of the world’s strictest jurisdictions.

Yet the operational and capital requirements significantly raise barriers to entry, prompting some firms to prioritize markets in Southeast Asia, the Middle East, or Latin America where rules are more permissive.

The outcome of this balancing act has global significance. If Hong Kong’s model proves successful with investor confidence growing and institutional adoption accelerating as it could inspire other financial centers, from Singapore to London, to replicate aspects of the regime. If, however, the regulatory burden drives too many firms away, the city risks undermining its status as a welcoming environment for digital assets.

As of now, 11 exchanges remain licensed in Hong Kong, representing a small but potentially more resilient ecosystem. International firms are watching closely, weighing whether the benefits of credibility and access outweigh the compliance costs. For investors, the next year may provide the clearest signal yet of whether Hong Kong’s regulatory experiment becomes a global blueprint or a cautionary tale.