In a statement today, the Hong Kong Securities and Futures Commission (SFC) noted that virtual products like earnings, derivatives, deposits, and savings are not allowed under the new digital asset regime.
The Hong Kong regulator also listed other practices that virtual asset trading platforms engage in that are “improper” under the new regime. The SFC further warned that it would not grant licenses to digital asset trading firms engaging in such practices.
“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,” a post on SFC’s blog stated.
SFC Calls out Misleading Exchanges
The Hong Kong regulator called out unlicensed virtual asset service providers who have publicly stated that they have applied for a license while they have not done so, calling such an act untrue and misleading. According to the SFC, such an act gives investors confidence in the safety of their funds on the platform while they are not officially licensed.
The Hong Kong regulator clarified that such an act is an offense and would be perceived as trying to induce an investor to trade in virtual assets. Also, the SFC stated it may reject the virtual asset trading platform license in the future, even if it later applies.
Apply or Desist: SFC
The SFC regulator issued a stern warning to VATPs yet to subscribe to the revolving regime to apply for a license or desist from illegally operating in the country.
“These established entities will also need to apply for SFC licenses, or they should proceed to close their business in Hong Kong. Conducting unlicensed activities in Hong Kong is a criminal offense,” the regulator stated.
Hong Kong continues its ploy to create a habitable environment for digital assets in the country and position itself as a global crypto hub. Its efforts are beginning to attract support even from China, which has placed a strong embargo on crypto activities on its mainland.
