Hong Kong's Securities and Futures Commission (SFC) has warned seven domestic cryptocurrency exchanges against trading cryptocurrencies which are defined as "securities," without a license.
Most of the exchanges took corrective measures or confirmed that they do not provide trading services for cryptocurrencies, the regulator said in a statement.
SFC also wrote to seven Initial Coin Offering (ICO) issuers, who confirmed compliance with regulations or stopped offering token to Hong Kong investors. The regulatory body alerted investors too to the potential risks of dealing with cryptocurrency exchanges and investing in ICOs.
The SFC has already taken regulatory action against a number of cryptocurrency exchanges and issuers of ICOs following the first warning statement it released on September 5, 2017.
"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," SFC's CEO Ashley Alder said.
Stat-ups raise money through ICOs for their cryptocurrency businesses. Since the market is not yet fully regulated, they easily bypass the regulatory processes. In exchange of any legal tender or other popular cryptocurrencies, the star-up companies issue "tokens." The SFC has observed that certain ICOs have terms and features that may mean that the digital tokens are "securities."
Investors have filed several complaints against ICO issuers alleging unlicensed or fraudulent activities. There were also complaints against cryptocurrency exchanges that misappropriated investors assets or manipulated the market, or that technical breakdowns of the exchanges' platforms caused them significant losses.
"If investors cannot fully understand the risks of cryptocurrencies and ICOs or they are not prepared for a significant loss, they should not invest. Investors who store their fiat currencies and cryptocurrencies with unregulated cryptocurrency exchanges should be aware of the risks of hacking and misappropriation of assets," said Julia Leung, the SFC's Executive Director of Intermediaries.
by RTT Staff Writer
For comments and feedback: email@example.com