Hong Kong’s Securities and Futures Commission (SFC) has released its annual report in which it states the commision will continue to monitor the cryptocurrency market and step in with penalties when it needs to.
SFC Will Remain Vigilant
The document highlights the risks tied to investing in the emerging technologies and especially singles out initial coin offerings (ICO) as a hotbed of fraud.
As detailed in the report the SFC took regulatory action against crypto exchanges and ICO issuers in the past year. In February letters were sent out to crypto exchanges warning them not to become involved in trading without a license as the tokens are considered a security defined by the Securities and Futures Ordinance. They also sent out seven letters to ICO issuers informing them of the SFC’s regulation, while some opted to end their offering most complied.
The report also contains information on the country’s regulatory sandbox which is meant to allow companies to “conduct regulated activities utilizing financial technologies.” In addition, the SFC announced a partnership with the Investor Education Center to create a campaign which will strive to inform potential investors about the risks associated with ICO’s and cryptocurrencies.
In this way, Hong Kong is following other countries who have been proactive in protecting the public from predatory investment schemes in the crypto market. The US SEC even launched a phony ICO called Howey Coin replete with a website sporting all the usual trappings of a fraudulent ICO from guarantees of massive returns to the endorsement of (in this case fake) celebrities. When a visitor to the site clicked on the invest button they were sent to an SEC page with information on ICO and cryptocurrency scams.
Hong Kong Among Many Others to Inform Investors
The SEC set up its cybercrime division in September of 2017, before ICO’s became the dominant revenue generating source they are today, in order to enforce established regulation but also to inform the public and pursue bad actors in the space involved in crimes outside of most jurisdictions like creating pyramid schemes and manipulating digital coin markets.
The SFC’s efforts to inform Hong Kong’s public about the dangers inherent in crypto-based investment may be seen as a positive part of the region’s regulatory vigor since the 2017 Bitcoin Bull market focused government attention on the space, but it was also new regulation that caused Binance, the worlds largest crypto exchange, to seek a friendlier atmosphere for their business. First in Japan, and more recently to Malta which has groomed itself as a haven for crypto and blockchain related companies.
Image from Shutterstock
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