Hong Kong's SFC Warns of Improper Practices by Unlicensed Virtual Asset Trading Platforms
Jessie A Ellis Aug 08, 2023 02:00
The Hong Kong Securities and Futures Commission (SFC) has warned against unlicensed virtual asset trading platforms (VATPs) engaging in improper practices, including false licensing claims and non-compliance with regulations.
The Hong Kong Securities and Futures Commission (SFC) has issued a warning against some unlicensed virtual asset trading platforms (VATPs) in Hong Kong, citing engagement in improper practices. The warning, released on the SFC's official website, highlights several areas of concern and potential legal consequences.
False Claims of Licensing Applications
The SFC has observed that some unlicensed VATPs are falsely claiming to have submitted license applications to the regulatory body. Such misleading claims are considered an offense, as they may induce others to trade in virtual assets under a false sense of assurance. The SFC has stated that it will consider any misrepresentation when assessing the VATP's fitness to be licensed.
Non-Compliance with SFC Requirements
The SFC has also noted that some VATPs are not complying with the legal and regulatory requirements under the new regime to regulate virtual asset service providers. This includes launching new services and products that may not comply with the applicable legal and regulatory requirements. Such non-compliant activities may raise concerns about the VATPs' intention to comply with the SFC's legal and regulatory requirements.
Transitional Arrangements
The transitional arrangements, effective before June 1, 2023, were designed to provide sufficient time for VATPs to prepare for compliance. However, the SFC has noticed that some unlicensed VATPs have set up new entities to provide virtual asset services in Hong Kong without complying with the new regime's requirements.
Warning to Investors
The SFC has taken the opportunity to warn investors about the risks of trading virtual assets on unregulated VATPs. Investors are cautioned that they may face the risk of losing their entire investment if the VATP ceases operation, collapses, is hacked, or suffers from any misappropriation of assets.
The SFC publishes a list of licensed virtual asset trading platforms on its website to inform the public of the regulatory status of VATPs operating in Hong Kong. This list includes the names of virtual asset trading platform operators formally licensed by the SFC. Currently, only two VATPs, OSL Exchange and HashKey Exchange, are licensed by the SFC.
The SFC's warning serves as a timely reminder to both VATPs and investors to adhere to the legal and regulatory requirements governing virtual asset trading in Hong Kong. The regulatory body continues to monitor the situation closely and has provided a list of licensed VATPs to guide investors.
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