Crypto and blockchain technology is slowly gaining popularity in Hong Kong. And now regulatory rules are being issued regarding crypto in Hog kong as well. On the 28th of March 2019, the SFC released a statement warning investors of the risks of security token offerings. SFC also deems security token offerings as securities. Since the security token offerings are considered to be securities, they are supervised by the Securities and Futures Ordinance (SFO).
The trend of having securities is steadily growing and will soon be a huge part of the market of digital assets. Shares, stakes and expensive metals like gold, when sold through a blockchain network, are considered to be Security tokens.
The trading of security token offerings without having a license is now considered as a crime. The financial regulators of Hong Kong did a press release saying that the trading of security token offerings is only valid if the person who is selling the token has a license to be doing so.
The brokers who deal in security token offerings are also required to gain a license and register themselves by the SFC. The SFC also reminded the brokers that they are obligated to provide all of the essential and necessary information to the investor when they are investing in a digital asset.
This is important so that the investor can have a clear idea of all the pros and cons that the investment can possibly bring with its self. While on the other hand, the SFC made sure to caution the investors as well. SFC told the investors to be aware of all the risks that can come when trading in securities. Along with this a list of all the risks was also issued by the commission. The list included risks like scams and problems related to the liquidity of an asset.
Right now the news that almost ninety percent of the trading volume of the largest cryptocurrency are fake has stirred up the crypto community. Sine the trend of trading in security token offerings is growing the SFC is making sure that investors make decisions with proper care to avoid serious losses and scams.
The debate of Initial Coin Offerings being securities or not is still on. Many ICO exchanges say that they are not securities; however, the SEC thinks otherwise. The SECs in Asia are putting together a framework to regulate the STOs properly.