Crypto Exchange Gate.io Renews Pursuit of Hong Kong License Despite High Compliance Barriers
Gate.io is positioning itself to re-enter Hong Kong’s regulated virtual asset market, with executives confirming plans to "reaffirm" their application for a Virtual Asset Service Provider (VASP) license. This decision marks a significant pivot after the exchange withdrew its previous application in May 2024 amid a wave of exits by other major global players. Kevin Lee, the Chief Commercial Officer of Gate Group and CEO of Gate.HK, has indicated that the earlier withdrawal was a strategic adjustment of business priorities rather than a permanent departure. The firm is now laser-focused on aligning its internal controls, custody solutions, and anti-money laundering (AML) protocols with the rigorous "opt-in" regime designed by Hong Kong regulators.
The primary hurdle for Gate.io and its peers remains the formidable cost of compliance in Hong Kong. The SFC has established one of the world’s most exacting regulatory frameworks, requiring exchanges to maintain high liquidity reserves, secure insurance for client assets, and implement expensive surveillance technology. These requirements have already driven away heavyweights like OKX and Bybit, who cited the commercially unviable nature of the region's limited retail market relative to the operational overhead. For Gate.io, pursuing the license despite these costs suggests a strategy focused on institutional credibility rather than just immediate retail revenue. By securing a Hong Kong license, the firm aims to validate its global reputation and gain a foothold in a jurisdiction that serves as a financial bridge between East and West.
Beyond the license application, Gate.io is diversifying its local footprint to ensure sustainability. The company is exploring the expansion of its Over-the-Counter (OTC) trading desk and other institutional services which may offer higher margins than standard retail spot trading. This multi-pronged approach allows the exchange to build relationships with Hong Kong’s deep pool of professional investors and family offices while waiting for the retail market to mature. The firm believes that as the regulatory dust settles, the "compliant environment" in Hong Kong will attract a second wave of capital that unregulated offshore exchanges cannot access.
Ultimately, Gate.io’s renewed bid is a test case for Hong Kong’s crypto ambitions. It challenges the narrative that the city’s regulatory bar is set too high for profitable business. If Gate.io succeeds in navigating the re-application process, it could signal a stabilization of the local market, where only the most capitalized and compliant firms survive. The exchange’s leadership views the current high compliance costs not merely as an expense, but as an investment in a "moat" that protects licensed entities from the volatility and legal risks plaguing the broader, unregulated crypto sector.
