The world of cryptocurrencies has been shaken by an important notice originating from Hong Kong. The regulatory authorities of the region have raised their voices with a clear and forceful warning aimed at exchanges operating without the proper license. This warning underscores the growing concern of regulators regarding security and legality in the cryptocurrency space, as well as their determination to maintain stricter control over digital financial operations.
The Securities and Futures Commission of Hong Kong (SFC) issued a warning about potential legal and regulatory consequences for certain unlicensed cryptocurrency exchange platforms engaging in “inappropriate practices.”
This is due to the SFC’s new licensing regime, which started on June 1st. Under this new regime, cryptocurrency companies must comply with the requirements set forth.
The authorities’ notice was given on August 7th, in which the SFC declared that some companies had falsely claimed to have submitted license applications in Hong Kong. This means that certain virtual asset trading platforms (VATPs) have falsely claimed to have submitted license applications to the SFC when they actually haven’t.
In the eyes of the SFC, such behavior is improper as it can “give the public a false sense of assurance that the VATP is in compliance with the SFC’s regulatory requirements.” [1]
Furthermore, “some unlicensed crypto trading platforms in Hong Kong set up new entities, claiming to have submitted applications to the securities regulator.” [2] Because of this, the SFC’s warning states that “These established entities will also need to apply for SFC licences or they should proceed to close their business in Hong Kong.”[3]
The SFC’s warning should not be taken lightly, as it points out the potential consequences that exchanges could face for fraudulent interpretations or operating without the proper license. In fact, the authorities have reiterated that fraudulent interpretation could result in sanctions under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO), and that engaging in unlicensed activities in Hong Kong is a criminal offense.
Finally, the SFC cautions investors about the consequences of dealing with a VATP that is not registered or licensed by the SFC, inviting them to only use those that possess a valid license.
It’s important to note that to date, some cryptocurrency companies like HashKey and OSL have received licenses under the SFC’s new regime.
The warning issued by the Hong Kong regulator sends a clear signal to unlicensed cryptocurrency exchanges in the region. As the cryptocurrency industry continues to evolve, collaboration between regulators and market participants becomes increasingly crucial to ensure a safe and regulated environment. The SFC’s warning reinforces the importance of operating within legal boundaries and serves as a reminder that authorities are vigilant in maintaining the integrity of the digital financial market.
Note: To find the full warning read here: https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=23PR87
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[1]https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=23PR87
[2]https://cointelegraph.com/news/hong-kong-securities-regulator-warns-criminal-activity-unlicensed-exchanges
[3]https://apps.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=23PR87
