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Hong Kong Securities regulator issues warning to delisted exchanges and cautions about ICOs

Feb 10, 2018 Posted /  4788 Views

Hong Kong Securities regulator issues warning to delisted exchanges and cautions about ICOs

There are rampant measures that are taken by the Hong Kong's securities regulator that have increased the scrutiny of the domestic crypto exchanges by ordering them not to trade in cryptocurrencies that are deemed as 'securities'. Subsequent to previous notice where Hong Kong's Securities and Futures Commission had advertised some digital tokens offered through initial coin offering (ICO) sales would be deemed as securities, the regulator has now prompted to take action against a number of native cryptocurrency exchanges and ICO issuers.

SFC revealed on Friday it had sent letters to seven anonymous cryptocurrency exchanges operating in or in connection with Hong Kong. The SFC warned these exchanges not to trade cryptocurrencies which deem as ‘securities’ under the law, without a license.

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Notably, a number of Hong Kong cryptocurrency exchanges rank in the top 20 by daily trading volume. The SFC disclosed that the exchange operators are under scrutiny  and have ‘either confirmed that they did not provide trading services for such cryptocurrencies or took immediate rectification measures, including removing relevant cryptocurrencies from their platforms.’

In addition, the SFC notified these exchanges of the disciplinary action that can be taken against them for despising the arrangement of ‘securities’ under the law. It said that it has classified the repeat offenders as well.

Independently, the regulator also disclosed that it had sent letters to seven ICO issuers which saw ‘most of them’ validate compliance with regulations or "immediately cased to offer tokens to Hong Kong investors."

The regulator appended:

“The SFC will continue to closely monitor ICOs, and will not tolerate any violations of the securities laws of Hong Kong.”

The regulator’s announcements come within a week of Hong Kong authorities starting a public crusade to educate and advise investors of investments prospects in cryptocurrencies and ICOs.

“We will continue to police the market and enforce when necessary,” added SFC chief executive Ashley Alder. “But we are also urging market professionals to do proper gatekeeping to prevent frauds or dubious fundraising and to assist us in ensuring compliance with the law.”

Moreover, the SFC cautioned the investors repeatedly that saving fiat or cryptocurrencies with unregulated exchanges leaves them susceptible to hacking and mismanagement risks, indicating investor complaints against cryptocurrency exchanges and ICO issuers.

‘The SFC may not have jurisdiction over cryptocurrency exchanges and ICO issuers if they have no nexus with Hong Kong or do not provide trading services for cryptocurrencies which are “securities” or “futures contracts”,’ the regulator remarked, further adding: ‘If, however, there is suspicion of fraud, the SFC is open to refer cases to the Police for investigation.’

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Tags: securities regulator initial coin offering Cryptocurrencies trade in cryptocurrencies crypto exchanges Hong Kong crypto

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