On September 5, 2017, the Hong Kong Securities and Futures Commission (SFC) regulatory authority issued a statement on token offerings.
In the statement, the SFC explained that certain digital tokens may be considered securities as defined in the Securities and Futures Ordinance, making them subject to Hong Kong securities laws. Although the SFC does not consider all virtual commodities to be securities, it did state that some tokens offered through crowdfunded token generation events may represent shares, equity, or ownership rights. It also said that in some cases the digital tokens may be considered debentures, liabilities, or debt owed by the issuer; in other cases, digital tokens may be considered a "collective investment scheme (CIS)."
The SFC went on to declare that "shares, debentures, and interests in a CIS are all regarded as 'securities.'"
“Where the digital tokens involved in an ICO fall under the definition of ‘securities,’ dealing in or advising on the digital tokens, or managing or marketing a fund investing in such digital tokens, may constitute a ‘regulated activity.’ Parties engaging in a ‘regulated activity’ are required to be licensed by or registered with the SFC irrespective of whether the parties involved are located in Hong Kong, so long as such business activities target the Hong Kong public.”
On January 16, 2014, the SFC released a “Circular to Licensed Corporations and Associated Entities - Anti-Money Laundering / Counter-Terrorist Financing - Money Laundering and Terrorist Financing Risks Associated with Virtual Commodities” to licensed corporations and associated entities. It reminds these licensed entities “to take all reasonable measures to ensure that proper safeguards exist” in an effort reduce laundering risks.
In the cautionary statement, the SFC encourages parties engaged in token offerings to seek legal or other professional counsel with regard to regulatory and legal requirements. It said that token offerings differ on a case-by-case basis and that investors should be aware of the potential risks of participating in token offerings.