Key Points:
- SFC’s Response: Hong Kong’s Securities and Futures Commission is taking action in response to the JPEX crypto exchange scandal.
- Public Awareness: SFC plans to publish a list of licensed and suspicious crypto trading platforms for public benefit.
- Collaboration for Accountability: SFC will collaborate with local police to investigate and bring wrongdoers to justice.
Following the unfolding JPEX scandal, Hong Kong’s Securities and Futures Commission (SFC) has announced its commitment to intensify efforts in regulating cryptocurrency trading platforms operating within its jurisdiction.
In a statement released on September 25, the SFC disclosed its intention to compile a comprehensive list encompassing licensed, deemed licensed, closing down, and application-pending virtual asset trading platforms (VATPs). The objective is to facilitate public awareness and empower individuals to distinguish between potentially unregulated VATPs conducting business in Hong Kong.
Moreover, the SFC has pledged to maintain a dedicated catalog of “suspicious VATPs,” prominently accessible on its website. This strategic move comes in response to the JPEX crypto exchange scandal, which has faced accusations of marketing its services to Hong Kong residents without obtaining the requisite license in the region, resulting in an estimated financial impact of approximately $178 million. As of the present moment, local law enforcement has registered over 2,200 complaints from affected exchange users, and 11 individuals, including crypto influencers, YouTubers, and employees of the allegedly fraudulent crypto exchange, have been detained for questioning.
The SFC, in a released statement, emphasized that the fallout from the JPEX incident underscores the risks associated with unregulated VATPs and underscores the imperative need for robust regulatory oversight to maintain market confidence. The regulators further revealed their intention to collaborate closely with local law enforcement to establish a dedicated platform for citizens to report suspicious activities and potential legal violations by VATPs. They also committed to conducting a thorough investigation into the JPEX incident to ensure that wrongdoers are held accountable.
Although the Hong Kong authorities introduced the new VATP licensing framework on June 1, only two cryptocurrency trading platforms, Hashkey and OSL Digital, have obtained licenses to serve retail customers thus far. Despite recent setbacks, the SFC reiterated its recognition of the potential advantages cryptocurrencies and digital assets offer to financial markets. However, they also acknowledged the inherent risks associated with crypto assets, including concerns related to money laundering and investor protection.
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