By Josiah Wilmoth
Hong Kong’s chief securities regulator announced its intent to crack down on non-compliant cryptocurrency exchanges.
Hong Kong Regulator Forces Cryptocurrency Exchanges to Delist Security Tokens
On Friday, Hong Kong’s Securities and Futures Commission (SFC) issued a statement alerting investors to the potential risks of both trading on cryptocurrency exchanges and investing in initial coin offerings (ICOs).
In the notice, the SFC revealed that it had sent letters to seven Hong Kong-based cryptocurrency exchanges, warning them that it is illegal for them to list security tokens without a license from the SFC.
The agency — which added that it also sent letters to a handful of ICO operators warning them not to allow Hong Kong residents to participate in their token sales — said that the crackdown came in response to complaints from consumers, who alleged, among other things, that they had been unable to withdraw their holdings from exchanges.
“We will continue to police the market and enforce when necessary,” said the SFC’s Chief Executive Officer Ashley Alder. “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.”
The SFC said that it received a satisfactory response from the exchanges, who either provided evidence that they were already compliant with the regulations or immediately delisted security tokens from their platforms.
SFC Action Follows Earlier Clampdown in Japan
Notably, these SFC actions came just days after Japan’s Financial Services Agency (FSA) announced that it intended to ramp up oversight of the country’s cryptocurrency exchanges, one of whom — the Tokyo-based Coincheck — had recently been robbed for $530 million worth of NEM tokens in the most lucrative cryptocurrency exchange hack ever recorded.
Moving forward, the FSA intends to conduct regular spot inspections of the country’s 32 cryptocurrency exchanges and issue mandatory improvement orders to firms found to have lax security measures or be otherwise out of compliance with financial regulations.
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Featured Image from AFP