The Hong Kong Securities and Futures Fee (SFC) issued a warning on Monday, Aug. 7, to digital asset buying and selling platforms (VATPs) concerned in what it practices, emphasizing the potential authorized and regulatory penalties.
This discover comes on the heels of the SFC’s statement of unlicensed VATPs falsely claiming to have submitted licensing purposes, and different non-compliant actions, together with launching new providers and merchandise beneath current entities that could be in violation of latest rules.
The warning is a part of a broader effort by Hong Kong authorities to control the burgeoning digital asset trade. Underneath the brand new regime, digital asset service suppliers are required to use for a license from the SFC, with a transitional interval extending till Might 31, 2024, to permit VATPs to arrange for compliance.
Deceptive claims, non-compliant actions
In keeping with the SFC, some unlicensed VATPs have misleadingly claimed to have submitted license purposes once they haven’t, making a false sense of assurance among the many public. The fee has additionally famous instances the place VATPs have arrange new entities to offer digital asset providers in Hong Kong with out complying with authorized and regulatory necessities.
The SFC warned that participating in fraudulent or reckless misrepresentation for the aim of inducing buying and selling in digital property might result in a tremendous of as much as $1,000,000 and/or as much as seven years’ imprisonment.
Regulatory efforts
Hong Kong has been working to strike a stability between encouraging the crypto trade’s progress and guaranteeing regulatory compliance. The Hong Kong Financial Authority (HKMA) has beforehand urged banks to just accept crypto shoppers whereas introducing a brand new licensing regime for crypto exchanges to foster clear rules.
Nonetheless, conventional banks stay cautious as a consequence of potential regulatory blowback and considerations over anti-money laundering and know-your-customer points with crypto exchanges.
In Might, the SFC eased necessities for crypto exchanges, revising its pointers as a consequence of a scarcity of accountable officers (ROs) within the subject. This adjustment was seen as a practical strategy to a scarcity of skilled expertise within the quickly rising digital asset sector.
Investor warning and name for public vigilance
The SFC’s warning additionally serves as a reminder to retail buyers, reminding them:
“…to be cautious of the dangers of buying and selling digital property on an unregulated VATP. Traders could face the potential danger of shedding their complete funding held on the VATP if it ceases operation, collapses, is hacked or in any other case suffers from any misappropriation of property.”
Most VATPs accessible by the general public stay unregulated, and the SFC has pledged to replace the listing of digital asset buying and selling platforms on its web site as approvals are granted. At current, solely OSL Trade and HashKey alternate are regulated inside Hong Kong.
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