- Hong Kong’s FSC issued a warning to unregulated crypto exchange.
- The commission vowed to continue protecting investors.
- Violators of FSC requirements will face legal consequences.
Hong Kong’s Security and Futures Commission (FSC) has issued a stern warning against unregulated crypto exchanges operating in the country. In an official statement published on August 8, 2023, the FSC has cautioned investors to be wary of unscrupulous activities perpetrated by dubious crypto firms disguising under questionable virtual asset trading platform (VATP) licenses.
Calling Out Fraudulent Advertising Claims
The commission has noted that a handful of unregulated crypto firms have been wooing users and investors through a false sense of assurance that they are fully compliant with the VATP licensing threshold and broader SFC’s regulatory requirements. CEO Julia Leung echoed that this act goes against FSC’s objective to protect investors and promote orderly and fair markets in the crypto industry.
“It is an offense for any person to make a fraudulent or reckless misrepresentation for the purpose of inducing another person to trade in virtual assets (Note 1). The SFC will take into account any misrepresentation made by an unlicensed VATP in considering its fitness and properness to be licensed should it eventually submit license applications to the SFC,” read the official statement.
Stringent Licensing Requirements
Hong Kong has enacted stringent licensing requirements following the newly initiated transitional arrangements to regulate crypto under the current regime. The country’s Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) mandates firms that provide virtual asset services to apply for a license with the FSC.
The legislation also provides a provision for repressing fraudulent or reckless misrepresentations by crypto firms. Culprits who violate the provision risk a conviction and subsequent fine of $1,000,00 and/or seven years imprisonment.
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