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Hong Kong SFC Sends Letters To Exchanges And ICO Issuers In Cryptocurrency Crackdown

By

Jordan

Daniell

WriterETHNews.com

The Securities and Futures Commission in Hong Kong has sent advisory letters to cryptocurrency exchanges and ICO issuers in or connected to Hong Kong. They serve as a reminder that in the eyes of regulators, the line for securities compliance has already been drawn and bending it will not be tolerated.

On February 9, 2018, Hong Kong's Securities and Futures Commission (SFC) once again issued a warning to cryptocurrency-related entities that fall under its jurisdiction.

As was the case early last September, the SFC's statement today maintains that some entities may be offering tokens that qualify as financial securities but are not officially licensed as such.

Consequently, today's statement announced that the commission sent 14 letters – seven to ICO issuers and seven to cryptocurrency exchanges – warning all parties that failure to comply with Hong Kong's Securities and Futures Ordinance will not be tolerated.

The SFC did not reveal which ICOs and exchanges were under scrutiny.

SFC CEO Ashley Alder cited the need for grassroots leadership in helping to create a legally compliant ecosystem:

"We will continue to police the market and enforce when necessary … 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."

According to the statement, most of the recipient exchanges confirmed that they were not listing the questionable cryptocurrencies or "took immediate rectification measures" to remove them. Likewise, most of the ICO issuers declared that their tokens were either following the law, or that they would cease to offer them to Hong Kongese investors without delay.

"If investors cannot fully understand the risks of cryptocurrencies and ICOs or they are not prepared for a significant loss, they should not invest," said SFC director Julia Leung, citing investor complaints received by the SFC.

The statement also references concerns that "in terms of daily trading volume, a number of cryptocurrency exchanges in Hong Kong or which have connections with Hong Kong rank in the top 20 globally." Whether the increased liability that comes with higher trading volumes figured prominently in the SFC's timing of this statement is unknown.

Today's announcement closed with a warning that, although its authority may be limited, it will be keeping an eye out for any untoward activities:

"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'. If, however, there is suspicion of fraud, the SFC is open to refer cases to the Police for investigation." 

Jordan Daniell

Jordan Daniell is a full-time staff writer for ETHNews with a passion for techno-social developments and cultural evolution. In his spare time, he enjoys astronomy, playing the bagpipes, and exploring southern California on foot. Jordan lives in Los Angeles and holds value in Ether.

ETHNews is committed to its Editorial Policy

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