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Hong Kong’s SFC puts up united front with police to monitor crypto platforms

Hong Kong's SFC puts up a united front with police to monitor crypto platformsHong Kong's SFC puts up a united front with police to monitor crypto platforms

In this post:

  • The Securities and Futures Commission (SFC) has formed a specialized working group with the Hong Kong Police Force (HKPF) to monitor Virtual Asset Trading Platforms (VATPs).
  • The group aims to enhance efforts in detecting and addressing illicit activities within VATPs.
  • This initiative comes after a high-profile case involving the unlicensed crypto exchange JPEX.

The Hong Kong Securities and Futures Commission (SFC) has taken a significant step toward combating illegal activities within Virtual Asset Trading Platforms (VATPs). In partnership with the Hong Kong Police Force (HKPF), the SFC has formed a specialized working group, an initiative that was set in motion following a top-level meeting between the two organizations on September 28, 2023. The working group aims to enhance efforts in detecting and addressing illicit activities within VATPs.

Hong Kong looks to strengthens crypto oversight 

The newly formed working group, composed of representatives from the HKPF’s Commercial Crime Bureau, Cyber Security and Technology Crime Bureau, Financial Intelligence and Investigations Bureau, alongside members from the SFC’s Enforcement Division and Intermediaries Division, is set to bolster surveillance and enforcement efforts within the virtual asset trading domain.

This collaborative effort is focused on streamlining the exchange of information about suspicious activities and breaches associated with VATPs. The aim is to enable swift responses to emerging threats. Moreover, the group intends to implement a mechanism for risk assessment, emphasizing the importance of evaluating potential risks posed by suspicious VATPs.

The working group also seeks to enhance coordination and cooperation in investigations related to virtual asset trading platforms. This partnership aims to fortify the regulatory framework governing VATPs by pooling resources and expertise.

Assistant Commissioner of Police (Crime) Eve Chung highlighted the crucial role of this new collaboration, affirming that it will significantly accelerate vital intelligence exchange and joint responses to challenges arising from VATPs, ultimately enhancing the protection of the general public in Hong Kong.

This partnership represents a significant stride in combating illicit activities within the virtual asset trading sector, demonstrating the dedication of regulatory and law enforcement authorities in Hong Kong to safeguarding investors and upholding the integrity of the financial landscape.

 Christopher Wilson, the SFC’s Executive Director of Enforcement, underlined the longstanding cooperation between the SFC and the police, expressing eagerness for even closer collaboration. He emphasized the joint deployment of their expertise and resources in addressing problematic VATPs and safeguarding investor interests.

Establishing control after JPEX case

Hong Kong’s SFC has recently announced that they would be intensifying measures to address concerns surrounding unregulated VATPs and strengthen investor protection through enhanced measures.

This move comes after a high-profile case involving unlicensed crypto exchange JPEX, which the SFC has accused of misleading investors. The exchange allegedly marketed products and services across Hong Kong using “social media influencers and key opinion leaders” without the necessary licenses. Over ten individuals, including JPEX employees and online influencers, were arrested by Hong Kong police in September on suspicion of conspiracy to commit fraud concerning the case.

The SFC clarified that JPEX never approached the regulator for any form of license, and no entity within the JPEX group holds a license from the SFC or applied for one to operate a virtual asset trading platform in Hong Kong.

Recognizing the potential benefits of digital finance and virtual asset activities in the financial markets, the SFC has identified associated risks, including decentralization, money laundering, and investor protection issues. Consequently, the regulator is introducing a range of measures, including implementing a new licensing regime for centralized VATPs under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.

SFC-licensed VATPs will be subject to stringent governance measures covering the secure custody of assets, prevention of market manipulation and abusive activities, and mitigation of conflicts of interest, all aimed at safeguarding the interests of investors.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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