Cryptocurrency exchanges that operate in the Asian financial hub without a license or violate local securities laws will face crackdown by Hong Kong regulator the Securities and Futures Commission (SFC), it said in its statement.
Due to “technical breakdowns” of the platforms, investors complained that they were unable to withdraw cryptocurrencies from their accounts with some exchanges, and that they had suffered significant losses, said the SFC when it received these complaints. It also pointed out that several complaints were directed towards issuers of ICO’s which allegedly carried out unlicensed and fraudulent activities.
SFC’s Chief Executive Officer Ashley Alder said, “We will continue to police the market and enforce when necessary, but we are also urging market professionals to do proper gatekeeping to prevent frauds or dubious fundraising and to assist us in ensuring compliance with the law.”
Global policy makers have upped their opposition to trading and regularization of these digital currencies and warned investors that the meteoric rise in the value was only a speculative bubble. This seemingly influenced the SFC’s move. Interestingly, Bitcoin, the best-known crypto asset, rose more than 1,000 percent in 2017.
The threat of regulatory clampdowns and bans from credit card firms to social media sites, however, have already resulted in a panic sell-off, with bitcoin plunging about 50 percent. In addition, The SFC said it had sent warning letters to seven cryptocurrency exchanges in Hong Kong or with connections to the city that they should not trade cryptocurrencies without a licence.
The regulator also said most of these exchanges which had been served warning either confirmed that they did not provide trading measures for cryptocurrencies or “took immediate rectification measures” including removing relevant cryptocurrencies from their platforms.