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Hong Kong’s Securities and Futures Commission (SFC) issued a warning addressing investors against crypto platforms “engaging in improper practices.”
On Monday, Hong Kong regulators issued a warning to unlicensed crypto platforms “engaging in improper practices.” The Securities and Futures Commission (SFC) said some platforms are falsely claiming to have applied for registration. HashKey and OSL are the only two licensed exchanges in the city.
SFC Takes a “Dim View” of Non-Compliance
The SFC warned the unlicensed crypto platform advising investors to beware of these operations trading without the necessary registration. In a press release, the regulator said:
“The Securities and Futures Commission (SFC) has observed some unlicensed virtual asset trading platforms (VATPs) engaging in improper practices. This statement warns VATPs of the potential legal and regulatory consequences of these improper practices and reminds investors to be wary of the risks of trading virtual assets on unregulated VATPs.”
The regulator said it became aware of exchanges conducting business after falsely claiming to have applied to it for registration. The SFC noted such false claims aim to “give the public a false sense of assurance” with the goal of “inducing another person to trade in virtual assets” and are an offence under Hong Kong’s Anti-Money Laundering and Counter-Terrorist Financing Ordinance.
Hong Kong is doing everything possible to regulate the industry and introduce a new licensing regime for virtual asset service providers. On 1 June, the SFC introduced a new regulatory framework for platforms engaging in trading activities. Under the regulations, such providers can apply to the SFC for licenses to legitimise their operations. Hong Kong’s approach to regulation aims to provide a structured environment for investors and traders. The Hashkey Exchange recently announced it obtained a license from the SFC, making it the first cryptocurrency platform allowed to offer services to retail users.
The SFC further warned the public that some unlicensed platforms continue to launch new products and services under existing entities that do not comply with its regulatory requirements. The Commission explained:
“For example, they may, under new or existing entities, launch certain virtual assets for trading by retail clients, trading services in virtual asset derivatives, or arrangements involving virtual assets such as virtual asset ‘deposits,’ ‘savings’ or ‘earnings’ which are not allowed under the new regime.”
The regulator advised investors trading on unregulated exchanges that they could risk “losing their entire investment” held on that exchange should they discontinue their operations, collapse, or are hacked.
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