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Gate.HK, the Hong Kong arm of cryptocurrency exchange Gate.io, has withdrawn its application for a virtual-asset trading platform licence, the third company affiliated with a major global exchange to end its bid to legally operate in the city under a new exacting regime.

The company took a proactive step to withdraw its application as part of a platform overhaul, and it has stopped registering new users, taking deposits and marketing its services in Hong Kong, according to its statement published on Wednesday.

Gate.HK, launched in May last year, submitted its application to the Securities and Futures Commission (SFC) in February under new rules that require exchanges serving customers in Hong Kong to be licensed.

The platform said it will cease trading on May 28, as required by the citys regulations, and it suggested users withdraw their assets by August 28.

Hong Kongs new mandatory licensing regime for centralised exchanges, which came into effect in June last year amid the citys push to become a virtual asset hub, calls for intensive compliance efforts and capital investments from firms hoping to gain a foothold in the city.

Under the new rules, the SFC may send a notice to a firm if it does not qualify for a so-called deeming arrangement, in which the platform is deemed to be licensed from June 1 while it awaits full approval for a licence. Businesses that fail to qualify are required to shut down by May 31 or within three months of being notified by the SFC, whichever is later.

Meeting the SFCs requirements has proved challenging. Eight firms have withdrawn their applications to date, according to the regulators official website, and they include local companies with ties to well-known global exchanges.

Gate.io, the parent of Gate.HK, ranked sixth by 24-hour trading volume on Friday, according to market tracker CoinGecko.

Gate.HK remains dedicated to maintaining compliant operations in Hong Kong, and is exploring the possibility of applying for other regulatory licences in the city, company chief executive Kevin Lee said in a statement.

Our overall business strategy to have a presence in Hong Kong has not been changed, he said.

There currently remains 20 applicants for Hong Kongs virtual-asset platform licence, with OKX, Crypto.com, Bybit and Bullish among the largest. Two exchanges, Hashkey Exchange and OSL Exchange, have been approved to serve retail investors.

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Hong Kong sees third major crypto exchange withdraw licence application - South China Morning Post