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On August 7th, the Hong Kong Securities and Futures Commission (SFC) warned all platforms working on virtual assets about regulatory non-compliance and urged them to comply with regulations, enhance business and customer verification measures.
The SFC alerts the Virtual Asset Trading Platforms (VATPs) after they observe unlicensed trading platforms without complying with Anti-Money-Laundering (AML) regulations. These counterfeit trading companies falsely claim they submitted the registration documents and compliance with various complement checks. The SFC also mentioned opening new companies and selling products under outdated laws that violate the new regulations.
This warning is part of a significant effort by the Hong Kong government and SFC trying to regulate the proliferating virtual asset industry. According to the latest regime laws, virtual asset platforms must register themselves and apply for a licence in the SFC. May 31, 2024, is the last date for the VATPs to be registered under the Hong Kong regulations.
The SFC reported that trading platforms are misleading the public by claiming noncompliance licences and establishing new services or products without complying with legal and regulatory requirements. These illicit activities can lead to VATPs fine of up to $1,000,000 and up to 7 years imprisonment.
Hong Kong has been working on regulatory regulations to strike a balance between banks and the crypto industry. Previously the Hong Kong Monetary Authority (HKMA) urged banks to onboard the crypto clients and introduce a new regime for crypto exchanges to regulations.
The SFC also alerts retail investors and reminds them “to be wary of the risks of trading virtual assets on an unregulated VATP. Investors may face the possible risk of losing their entire investment held on the VATP if it ceases operation, collapses, is hacked or otherwise suffers from any misappropriation of assets.”
The SFC has pledged to disclose the list of registered VATPs trading platforms on their website. This will protect individual investors from scammers in this rapidly growing Virtual asset industry.