Hong Kong’s SFC May Take Action Against ICOs and Cryptocurrency Due to Investor Protection Issues
Hong Kong’s Securities and Futures Commission (SFC) is warning investors about the potential risks of investing in cryptocurrency trading and ICO activities. The financial regulator is concerned about the investor protection issues in this area .
Leung Fung-yee, the executive director of Hong Kong’s SFC, attended the. She announced that SFC has strengthened and tightened the regulations on the cryptocurrency and initial coin offering (ICO) financial activities, to lower fraud and cyber risk.
Leung pointed out that, (ICO) using a token to promise investors specific services in the future, however, the whole project without any detailed information about their profit model, there is even no specific working plan or schedule.
“It is just like launching a blank sheet for public subscription. There is no one kind of investment product in the market completes capital raising in this way” she added that, “Both of bond and fund need to be reviewed by professionals, there are significant investor protection issues in cryptocurrency trading activities.”
SFC is keeping their eyes on the ICO activities, they will continue to police the market and enforce when necessary, according to Leung. For instance, SFC sent a warning letter to a offshore ICO activity and ask them to reject users with Hong Kong’s IP addresses to access their site.
Although some ICO issuers are typically assisted by lawyers, accountants and consultants for advice to structure the offering as utility tokens to fall outside the purview of the Securities and Futures Ordinance (SFO) and to circumvent the scrutiny of the SFC. The financial regulator sent letters to 7 illegal cryptocurrency exchanges and warning them to stop cryptocurrency trading on February 9.
SFC continues to closely monitor ICO for a long time. As bitcoin and ICO become more and more popular, a lot of investors invest in this market. However, most of them cannot fully understand the risks of cryptocurrency and ICOs, they are not prepared for a significant loss which makes investor protection becomes serious issues. Hong Kong’s SFC may enforce a series of regulatory policies and measures to protect investors in the near future.