Hong Kong’s financial regulator, the Securities and Futures Commission (SFC), has announced that it will be taking stronger measures to combat unregulated cryptocurrency trading platforms operating within its jurisdiction. This move comes in response to the ongoing JPEX crypto exchange scandal, which has highlighted the risks associated with dealing with unregulated platforms and the need for proper regulation to maintain market confidence.
In its recent announcement, the SFC stated that it will publish a list of all licensed, deemed licensed, closing down, and application-pending virtual asset trading platforms (VATPs). This list aims to help members of the public identify potentially unregulated VATPs that may be operating in Hong Kong. Additionally, the SFC will maintain a dedicated list of “suspicious VATPs” on its website, making it easily accessible for individuals to stay informed and avoid engaging with unregulated platforms.
The JPEX crypto exchange scandal, which has faced accusations of promoting its services to Hong Kong residents without obtaining a license, is estimated to have caused a financial loss of around $178 million. Local police have received over 2,200 complaints from affected users, leading to the questioning and custody of 11 people involved in the fraud.
To address such incidents and prevent their recurrence, the SFC will be collaborating with local law enforcement to establish a dedicated channel for citizens to share information on suspicious activity and potential legal breaches by VATPs. Furthermore, the SFC will investigate the JPEX incident thoroughly to bring the wrong-doers to justice.
Since the introduction of the new VATP licensing regime on June 1, only two cryptocurrency trading platforms, Hashkey and OSL Digital, have obtained a license to provide services to retail customers in Hong Kong. The SFC acknowledges that cryptocurrencies and other digital assets offer potential benefits to financial markets but is also aware of the associated risks, such as money laundering and investor protection concerns.
While the SFC’s efforts to combat unregulated cryptocurrency trading platforms are commendable, it is crucial for individuals to exercise caution and do their due diligence when engaging with any trading platform. By staying informed and relying on licensed platforms, investors can better protect themselves from potential fraud or loss.
The SFC’s commitment to increasing transparency and monitoring unregulated VATPs sends a strong message that Hong Kong is taking steps to ensure the integrity and safety of its financial markets. As the cryptocurrency industry continues to evolve, it is essential for regulators to stay vigilant and enforce necessary regulations to safeguard investors and maintain public trust.