The Hong Kong Securities and Futures Commission is set to put in place new and additional measures to ensure consumer protection citing risks of dealing with unregulated Virtual Assets Trading Platforms. Hong Kong SFC made this move following the recent JPEX incident. The measures will also aid in reinforcing information dissemination and investor education, SFC emphasized.
Recently, JPEX, a Hong Kong-based crypto exchange platform was reportedly involved in a scandal that has recorded more than 2,265 complaints from victims of the exchange, with the total monetary value involved estimated at around $178 million (1.4 billion Hong Kong dollars). However, in this case, 11 suspects have been taken into custody. SFC highlights that this event speaks further about the risk of associating with unregulated Virtual Assets Trading Platforms and the need to enhance information dissemination to aid investor protection.
Following, SFC has outlined four key measures it would put in place going forward. Firstly, providing a list of licensed VATPs, a list of closing-down VATPs, a list of deemed licensed VATPs, and a list of VATP applicants (per public demand). Secondly, issue a list of suspicious VATPs and provide investors with early-stage information about these VATPs.
Thirdly, SFC stated it will launch a campaign in collaboration with the Investor and Financial Education Council (IFEC) to raise awareness in guarding against fraud. Further, the mass media, social media, and education talks will be employed to enhance investor education, SFC said.
Finally, SFC said it will continue its intelligence gathering on different businesses associated with VAs.
While the SFC admits the benefits of the blockchain: the underlying technology of digital finance and virtual asset (VA) activities, it also points out risks associated with them including decentralization, money laundering, and investor protection issues.
SFC mentioned that the risks identified are the same as those identified by other international financial regulators. The regulator pointed out that since its licensing regime, it has been on deck to ensure adherence to approved VATPs and has been working closely with IFEC on investor protection.
Additionally, the Hong Kong SFC emphasized it will work closely with the police and government of Hong Kong to implement these measures, dig more into the JPEX scandal, and continue to foster the web3 ecosystem in Hong Kong.
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