Hong Kong Regulators Crack Down on Cryptocurrency and Illicit ICOs

Fintechist Hong Kong Cryptocurrency ICOs

Hong Kong may become the next area where cryptocurrency regulation goes into effect. It seems the local Securities and Futures Commission is keeping a close eye on this industry. A new warning was sent to investors this week to discuss the risks associated with cryptocurrency exchanges and ICOs. It is not the first time such a warning is issued either. Local exchanges have already received a letter which leaves nothing to the imagination.

Hong Kong-based regulators grow concerned over Bitcoin and initial coin offerings. That is only normal, as we see a similar trend in other Asian countries. China has certainly set an aggressive tone in this regard. South Korea has taken a far more positive approach, even though it spooked the markets as well. With Hong Kong now cracking down on this industry, another market shakeup seems imminent.

Cryptocurrency is on Hong Kong’s Regulatory Radar

To put this into perspective, the SFC sent letters to seven major cryptocurrency exchanges. In this letter, they explain how the trading of securities is a major concern. Any currency which can be defined as a security is a risk for the trading platform itself. It seems most exchanges successfully avoid trading such tokens as of right now. Even the ones who did so in the past have removed most ICO tokens already. However, there is still further cause for concern.

SFC Executive Director of Intermediaries Julia Leung states:

“If investors cannot fully understand the risks of cryptocurrencies and ICOs or they are not prepared for a significant loss, they should not invest. Investors who store their fiat currencies and cryptocurrencies with unregulated cryptocurrency exchanges should be aware of the risks of hacking and misappropriation of assets.”

It is possible the SFC will take further action when and where appropriate. Mainly cryptocurrency exchanges disregarding the current regulatory provisions will be scrutinized moving forward. Repeat offenders will also feel the wrath of the SFC in the future. Other than exchanges, the organization has also written letters to a handful of ICO issuers. Most of these projects are fully compliant, which is a positive sign. Others have immediately halted all token offerings to Hong Kong-based investors as a result of this letter.

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