The Hong Kong Securities and Futures Fee (SFC) issued a warning on Monday, Aug. 7, to digital asset buying and selling platforms (VATPs) concerned in what it practices, emphasizing the potential authorized and regulatory penalties.
This discover comes on the heels of the SFC’s statement of unlicensed VATPs falsely claiming to have submitted licensing functions, and different non-compliant actions, together with launching new providers and merchandise beneath present entities which may be in violation of recent rules.
The warning is a part of a broader effort by Hong Kong authorities to manage the burgeoning digital asset business. Beneath the brand new regime, digital asset service suppliers are required to use for a license from the SFC, with a transitional interval extending till Could 31, 2024, to permit VATPs to arrange for compliance.
Deceptive claims, non-compliant actions
Based on the SFC, some unlicensed VATPs have misleadingly claimed to have submitted license functions once they haven’t, making a false sense of assurance among the many public. The fee has additionally famous instances the place VATPs have arrange new entities to supply digital asset providers in Hong Kong with out complying with authorized and regulatory necessities.
The SFC warned that participating in fraudulent or reckless misrepresentation for the aim of inducing buying and selling in digital belongings may result in a effective of as much as $1,000,000 and/or as much as seven years’ imprisonment.
Regulatory efforts
Hong Kong has been working to strike a steadiness between encouraging the crypto business’s development and guaranteeing regulatory compliance. The Hong Kong Financial Authority (HKMA) has beforehand urged banks to simply accept crypto purchasers whereas introducing a brand new licensing regime for crypto exchanges to foster clear rules.
Nevertheless, conventional banks stay cautious as a result of potential regulatory blowback and issues over anti-money laundering and know-your-customer points with crypto exchanges.
In Could, the SFC eased necessities for crypto exchanges, revising its pointers as a result of a scarcity of accountable officers (ROs) within the discipline. This adjustment was seen as a realistic strategy to an absence of skilled expertise within the quickly rising digital asset sector.
Investor warning and name for public vigilance
The SFC’s warning additionally serves as a reminder to retail buyers, reminding them:
“…to be cautious of the dangers of buying and selling digital belongings on an unregulated VATP. Buyers could face the doable threat of shedding their whole funding held on the VATP if it ceases operation, collapses, is hacked or in any other case suffers from any misappropriation of belongings.”
Most VATPs accessible by the general public stay unregulated, and the SFC has pledged to replace the record of digital asset buying and selling platforms on its web site as approvals are granted. At current, solely OSL Change and HashKey trade are regulated inside Hong Kong.
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