Hong Kong’s policies pose some difficulties “Crypto exchange Gate eyes Hong Kong licence even as compliance costs challenge growth” and covering the cost of operating locally is difficult, founder and CEO Lin Han says.
Cryptocurrency exchange Gate, whose Hong Kong unit last year pulled out of the city’s virtual asset trading platform (VATP) licence application, may consider applying again, but high compliance costs still pose challenges for the company, according to founder and CEO Lin Han.
“We understand the intention behind [Hong Kong’s] policies, but they do impose some constraints,” Han said in an interview on Thursday. “After a year of operation [in Hong Kong], we discovered that it was difficult to cover the cost locally.”
Gate had been “observing” other Hong Kong-licensed platforms’ performance and their ability to scale their business, as it evaluated whether to reactivate its crypto exchange licensing efforts in the city, Han said.
But the company would “actively explore” applying for the city’s forthcoming licences for virtual asset (VA) dealing services, previously named over-the-counter virtual asset trading services, as soon as the regulatory framework was launched, he said. Gate was also looking to work with payment companies by offering blockchain infrastructure services, he added.
Gate, which started in mainland China in 2013, was the world’s third-biggest cryptocurrency exchange by 24-hour trading volume, behind Binance and Bybit, according to data tracker CoinGecko.
The company was among a number of major crypto exchanges that dabbled in the Hong Kong market between 2023 and 2024 after the city’s regulators launched a mandatory licensing regime for trading platforms. Many exited Hong Kong last year after a one-year grace period, which had allowed them to operate while applying for a licence.
Han’s remarks offered insights into the intensive efforts required for global platforms to gain a legitimate foothold under Hong Kong’s regulatory framework for digital assets.
He added that while Hong Kong’s market was highly competitive and licensing costs were high, it was also limited in both size and the range of digital asset products that could be offered.
“The reality is that users have many options outside Hong Kong,” Han said. “So it’s very challenging for us to provide a local service that can convince users to choose us over overseas platforms. This is one of the biggest difficulties we face.”
However, Gate had maintained communication with local regulators and viewed the city’s digital asset vision “very forward-looking”, Han said.
Han founded Gate in April 2013 in Jinan, the capital of east China’s Shandong province, before Beijing’s crypto crackdown forced companies to move overseas.
The exchange had 40 million registered users globally, having maintained an annual 30 per cent user number growth rate over the past few years amid a rapidly expanding digital asset industry, Han said. It was focusing on markets including the US, Europe, Japan and the Middle East, he said.
Going public was not urgent for Gate as it was not under financial pressure, but it was part of the company’s long-term plan and would proceed with the listing at an appropriate time, Han said.
