The Hong Kong Securities and Futures Commission has sent letters to seven cryptocurrency exchanges regarding their listings of securities tokens without a license. Most of the exchanges took immediate rectification measures, including removing problematic cryptocurrencies from their platforms.
Hong Kong Takes Action
The Hong Kong Securities and Futures Commission (SFC) announced on Friday that it “has taken regulatory action against a number of cryptocurrency exchanges and issuers of ICOs.”
The agency sent letters to seven cryptocurrency exchanges in Hong Kong or in connection with Hong Kong, warning “them that they should not trade cryptocurrencies which are ‘securities’ as defined in the Securities and Futures Ordinance (SFO) without a licence.”
This regulatory action follows the FSC’s warning last September that digital tokens may be considered securities as defined by the SFO, “and subject to the securities laws of Hong Kong.”
The Commission revealed that after receiving its letters:
Most of these cryptocurrency exchanges either confirmed that they did not provide trading services for such cryptocurrencies or took immediate rectification measures, including removing relevant cryptocurrencies from their platforms.
In addition, the FSC stated that it has also written to seven initial coin offering (ICO) issuers. “Most of them confirmed compliance with the SFC’s regulatory regime or immediately ceased to offer tokens to Hong Kong investors,” the agency confirmed, adding that it will “continue to closely monitor ICOs, and will not tolerate any violations of the securities laws of Hong Kong.”
Furthermore, the Commission said it “may take further action where appropriate,” against any crypto exchanges which disregard the SFO provisions as well as repeat offenders.
Warnings and Complaints
The SFC has warned investors of the risks associated with cryptocurrency and ICO investing several times. Following a warning in September, the agency issued a circular in December cautioning investors of the risks associated with bitcoin futures contracts and other crypto investments.
In Friday’s announcement, the Commission noted that it has received complaints from investors about not being able to withdraw fiat currencies or cryptocurrencies from their accounts at crypto exchanges. “Some complainants claimed that cryptocurrency exchanges had misappropriated their assets or manipulated the market, or that technical breakdowns of the exchanges’ platforms caused them significant losses,” the agency detailed. “Several complaints against ICO issuers alleged unlicensed or fraudulent activities.”
The CEO of the FSC, Ashley Alder, commented:
We will continue to police the market and enforce when necessary…But we are also urging market professionals to do proper gatekeeping to prevent fraud or dubious fundraising and to assist us in ensuring compliance with the law.
Earlier this week, the Chinese authorities decided to ban foreign cryptocurrency exchanges. “Unlike the mainland, Hong Kong allows unregulated trading of digital tokens as long as the products changing hands are not in a format that would fall under the SFC’s jurisdiction,” South China Morning Post describes.
The FSC’s action also coincides with the Hong Kong-based crypto exchange Binance suspending trading on Thursday. The company denied that it has been hacked and its CEO subsequently tweeted explaining that the downtime is due to a “server issue on our replica database cluster, causing some data to be out of sync.”
What do you think of the Hong Kong SFC’s action? Let us know in the comments section below.
Images courtesy of Shutterstock and the Hong Kong SFC.
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The post Hong Kong Cracks Down on Securities Tokens – 7 Crypto Exchanges Targeted appeared first on Bitcoin News.
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Author: Kevin Helms