Hong Kong regulator the Securities and Futures Commission (SFC) said on Friday it would crackdown on cryptocurrency exchanges that operate in the Asian financial hub without a license or violate local securities laws. The SFC said it had received investor complaints they were unable to withdraw cryptocurrencies from their accounts with some exchanges, and that they had suffered significant losses due to “technical breakdowns” of the platforms.
Several complaints against issuers of initial coin offerings (ICOs) – where companies or projects issue their own digital coins or ‘tokens’ as a way of raising real world money from the public – alleged unlicensed or fraudulent activities, it said. “We will continue to police the market and enforce when necessary,” said the SFC’s Chief Executive Officer Ashley Alder. “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.”
The SFC’s move comes as global policymakers have ratcheted up their opposition to trading the digital currencies and have warned investors that their meteoric rise last year was a speculative bubble. 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. 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.
Most of these exchanges either confirmed that they did not provide trading services for cryptocurrencies or “took immediate rectification measures” including removing relevant cryptocurrencies from their platforms, the regulator said.