Hong Kong Regulators Warn Naughty Crypto Exchanges Operating Without Permit

Hong Kong regulators gave a stern warning to crypto companies. (Photo; Doc. Analytics Insight)

JAKARTA - The Hong Kong Securities and Futures Commission (SFC) has issued a stern warning to crypto trading service providers operating without a license.

In this warning, the SFC expressed concern about the "inappropriate practices" of a number of platforms and reminded investors to be careful of these platforms that may not have licenses or may never apply for licenses.

The SFC has observed that some virtual asset trading platforms (VATPs) that do not have licenses have been involved in doubtful practices. Although some platforms claim to have applied for a license, the reality is that they haven't. This gives users the wrong impression that the platform meets regulatory requirements, even though it violates.

The warning comes after Hong Kong launched a new licensing regime for crypto service providers on June 1, with the aim of rebuilding its credibility as a leading financial hub and digital asset center. The licensing regime follows strict rules and emphasizes compliance.

Transitional arrangements are in place to give VATPs operating before June 1, 2023 to meet the requirements of the new licensing regime. Although they were given a deadline until May 31, 2024 to continue operating, the SFC has identified several VATPs who have not yet received permission to have set up new entities to offer crypto services in Hong Kong.

They claim they intend to apply for a permit to the regulator. However, the services offered by some of these entities are still not in accordance with applicable regulations.

The SFC also observed that some virtual asset service providers without permission continue to launch new products under existing entities, which may not comply with legal and regulatory requirements. This can raise doubts about VATP's seriousness in complying with regulatory requirements and their ability to obtain a license.

The SFC also highlights the risks for investors trading on unlicensed platforms, including the risk of losing digital assets if the platform stops operating suddenly. Operating a crypto trading company without a permission in Hong Kong can be considered a criminal act.