Virtual Currency Looking for a Store Exchange License Application Rejected? Uncovering the four common causes of death and how to crack them

A lesson in blood and tears from 14 platforms: don't step on these "landmines"!
Turning to the latest Hong Kong SFC announcement (April 2025), the list of "license applications returned, refused or withdrawn" is staggering:

  • Meex Digital Securities: February 2024 Returned for "Incomplete Application Documentation"
  • Bitcoin World Technology: Dismissed in October 2024 for "significant unresolved issues"
  • OKX, Bybit, Huobi HKEleven giants withdrew their applications on their own initiative

Industry insiders revealed that nearly 30% of the applicants fell at the starting line, the key cause of death focused on four major hard injuries:

Cause of death 1: Documentation "three short of one" directly out of the game

The HKMA has made it clear that one of the application forms must be missing, but fatal omissions are common in practice:

  • Uncertified overseas shareholders' documents(e.g. Huobi HK's first application was rejected)
  • Anti-money laundering policy copy and paste(Meex returned for failure to tailor policy)
  • Empty business plan(A platform describes hundreds of billions of transactions in just three pages.)

Compliance experts warn, "When you turn in a cut-and-paste patchwork of AML policies, Customs is ready to stamp the return."

Cause of death 2: The anti-money laundering system is useless.

Under the Anti-Money Laundering Ordinance (AMLO), these loopholes carry a direct death sentence:

  • Not contracted with a compliant screener such as World-Check.
  • Transaction monitoring system relying only on manual Excel records (internal documents of a retired platform exposed)
  • Compliance Officer without Hong Kong permanent resident status

Bitcoin World Technology, which was bounced in 2024, was unable to demonstrate "real-time blacklist screening capabilities".

Cause of Death 3: Falling in the Fit and Proper test

Shareholders/directors are required to undergo stringent background checks, which are often overlooked by applicants:

  • Concealment of Overseas Criminal Records(Customs and Excise Department and Interpol cross-matching)
  • Unknown source of funds (suspicious cross-border flows in personal bank statements)
  • Failure to pass AMLO written test (at least 1 director must pass a compliance test)

A Chinese-funded platform has withdrawn its application, with industry rumors suggesting that its ultimate beneficiary failed to pass the PEP affiliation test.

Cause of death 4: Unexploded bombs planted in business premises

Even for purely online businesses, these physical requirements still jam up applications:

  • Application with Residential Address (Direct Contravention of Chapter 5 of the Ordinance)
  • Unsigned "Owner's Consent Form" hindered inspection
  • Inadequate fire and burglary protection for record storage rooms (critical point for on-site shooting in Customs)

Reverse victory program: three strokes to open the two veins

Tip 1: Document Golden Triangle Matrix 

1. business plan → reveal "daily transaction monitoring flowchart" in detail
2. AML Policy → Embedded "EDD Module for High Risk Customers of Virtual Currency".
3. Venue Proof → Lease Agreement, Land Search and Fire Report are indispensable.

Tip 2: Stress Test to Pass the Interview

  • Mock C&ED blitz question: "What if a customer splits 10 transfers of 99,000 USDT?".
  • Compliance Officer's must-have pass phrase: "Under AMLO Section 26, we immediately freeze the account and file an STR report."

Tip #3: Cracking the Background Survey Landmine

  • Shareholders prepare "Certificate of No Criminal Conviction + Fund Traceability Report" 6 months in advance.
  • Board of Directors License Training: Locking in AMLO Chapters 3, 5, and 7 High Frequency Test Points

The Brutal Truth: Licenses Are Not the End of the Line, They Are the Beginning of Compliance Purgatory
If you step on these red lines after holding a license, your license will be revoked:
⚠️ Failure to keep transaction records for 5 years (Customs raids at any time)
⚠️ Late Reporting of Suspicious Transactions (JFIU notification required within 72 hours)
⚠️ Failure to complete 5 hours of compliance training per year

The Director of Compliance of a licensed exchange admits, "We simulate customs inspections every month, and compliance costs account for 35% of our operating expenses.

Platforms that are still in the process of applying for a license should be grateful that they are not on the "winding up list". After all, when the Customs and Excise Department issues a liquidation order, even the chance to "start again" will be lost in the wave of virtual currency.

(This article is written in accordance with the Hong Kong Securities and Futures Commission's April 2025 announcement and the AMLO Ordinance. For details of specific cases, please refer to the official "Returned License Application List")

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