- The Floki team is taking action to address the concerns of Hong Kong’s Securities and Futures Commission (SFC), which labeled its staking program as a suspicious investment product.
- Measures include warning notices, blocking Hong Kong users from staking programs, and pausing marketing campaigns in the region.
Floki’s Response to Regulatory Scrutiny
In the wake of Hong Kong’s Securities and Futures Commission (SFC) placing the staking program of the meme-based cryptocurrency project Floki on its list of suspicious investment products, the Floki team has outlined a series of actions to align with regulatory expectations.
Mitigating Regulatory Concerns
The team’s response, articulated in a recent Medium post, reveals a proactive stance towards mitigating the regulatory concerns.
“We’ve taken steps to mitigate concerns in jurisdictions where the regulatory framework does not specifically cover or cater for the staking programs,”
they stated. The SFC’s primary concern appears to be the high Annual Percentage Yield (APY) offered by Floki and TokenFi’s staking programs.
To address these concerns, the Floki team has implemented various measures tailored to the Hong Kong market. These include issuing warning notices, actively blocking Hong Kong users from participating in their staking programs, and pausing their offline marketing campaign in the region. This approach ensures that no Hong Kong users have engaged in the program thus far.
Understanding Floki’s Staking Program
Staking, in the context of blockchain technology, involves locking cryptocurrencies into a network to receive rewards. Floki‘s staking program’s high APY is sustained through a unique rewards system using $TOKEN from its sister project TokenFi. This system involves a market-responsive APY, a decentralized and community-centric allocation strategy, and independence from traditional venture capital funding or presales.
SFC’s Warning to Investors
In December 2022, the SFC issued a warning to investors about the high risks associated with virtual asset platforms offering services such as deposit, saving, or staking. The regulator emphasized the potential for significant losses, stressing the unregulated nature of these platforms and advising investors to proceed with caution. The SFC clarified,
“Whilst some [Virtual Assets] Arrangements are commonly labeled or marketed as ‘deposits’ or ‘savings’ products, they are not regulated and are not the same as bank deposits. Investors are not afforded any form of protection.”
Floki’s Forward-Looking Strategy
By implementing these measures, the Floki team demonstrates a commitment to regulatory compliance and investor protection, while acknowledging the evolving landscape of blockchain and cryptocurrency regulations. Their response to the SFC’s concerns reflects an understanding of the necessity for crypto projects to adapt to diverse regulatory frameworks globally.