The deadline for applying for a license for a Hong Kong crypto exchange has been announced

Crypto exchanges in Hong Kong have until February 29 to obtain a Virtual Asset Trading Platform (VATP) license from the city's Securities and Futures Commission (SFC) or close their businesses and exit the region within three months.

As of February 26, 18 crypto exchanges have applied for SFC registration, including OKX, Bybit, Crypto.com and Binance-linked HKVAX. Four other applications have been canceled since the licensing system opened last August. Huobi HK, a subsidiary of Hong Kong-based crypto exchange Huobi (now HTX), submitted a VaTP application on February 20 but withdrew it three days later. The exchange did not say why it withdrew the application.

Once licensed, crypto exchanges will allow retail investors to trade Bitcoin (BTC) and Ether (ETH). Various altcoins and stablecoins are currently being evaluated by the SFC for trading licenses.

Currently, the exchanges that have received their Hong Kong VATP license are OSL and HashKey. According to local news reports, exchanges that do not comply with VATP requirements will have to cease all operations by May 31. Likewise, exchanges whose VATP application has been rejected by the SFC will also have to vacate the city within three months.

Despite a clear regulatory path, unauthorized crypto exchanges remain a persistent problem in Hong Kong.

Last year, the two largest crypto exchanges in Hong Kong, JPEX and Hounax, collapsed after allegations of Ponzi scheme operations. An estimated $180 million of investor money was lost in the JPX scandal, and 145 victims lost a total of $18.9 million to the Honax scam. Although authorities have frozen some funds linked to JPEX and Hounax, most investors' money is still missing.

In the year On February 26, another Hong Kong crypto exchange, BitForex, came under fire a day after it stopped redeeming users and withdrew $56 million from its hot wallet. The exchange has stopped responding to user queries. An investigation is underway.

Related: Hong Kong sees surge in crypto license applications