Hong Kong’s Securities and Futures Commission (SFC) has announced its commitment to bolster efforts in addressing unregulated cryptocurrency trading platforms operating within its jurisdiction. In response to recent concerns, the SFC will take steps to enhance transparency by publishing lists of licensed and unlicensed virtual asset trading platforms (VATPs). This initiative aims to empower the public to identify potentially unregulated platforms while reinforcing the need for proper regulation in the crypto space.
Cracking down on unregulated crypto trading platforms
Listing Licensed and Unlicensed VATPs: The SFC has unveiled plans to release comprehensive lists categorizing virtual asset trading platforms (VATPs) in Hong Kong. These lists will include platforms that are licensed, deemed licensed, in the process of closing down, and those with pending license applications. By providing this information, the SFC intends to create transparency and enable individuals to differentiate between regulated and potentially unregulated VATPs operating in the region.
Dedicated List of “Suspicious VATPs”: In a bid to further protect investors, the SFC will maintain a dedicated list of “suspicious VATPs.” This list will be prominently displayed on the SFC’s website, making it easily accessible to the public. The move is a response to the fallout from the recent JPEX crypto exchange scandal, which saw the alleged promotion of services to Hong Kong residents without the necessary license. The scandal is estimated to have caused financial losses of approximately $178 million, with more than 2,200 complaints filed by affected users to date.
The SFC has expressed its commitment to collaborate with local law enforcement agencies, particularly the police, to establish a dedicated channel for citizens to report suspicious activities and potential legal violations by VATPs. This collaborative effort aims to enhance vigilance in the crypto space and assist in the investigation of incidents like the JPEX scandal to ensure that wrongdoers are brought to justice.
Regulatory landscape in Hong Kong
Hong Kong introduced a new virtual asset trading platform (VATP) licensing regime on June 1. Under this framework, cryptocurrency trading platforms are required to obtain licenses to provide services to retail customers. However, as of now, only two platforms, Hashkey and OSL Digital, have successfully acquired licenses, allowing them to offer services to retail customers.
While acknowledging the potential benefits that cryptocurrencies and digital assets can bring to financial markets, the SFC has also identified a range of associated risks. These risks encompass concerns related to money laundering and investor protection. The recent JPEX incident serves as a stark reminder of the inherent risks associated with unregulated VATPs and the pressing need for robust regulatory oversight.