HK SFC Blacklists ‘Suspicious” Crypto Platforms After JPEX Scam

Due to the ongoing JPEX Crypot scandal, the SFC’s new regulations went into effect right away.
HK SFC blacklists 'Suspicious'' Crypto Platforms after JPEX Scam

The financial regulator of Hong Kong, the Securities and Futures Commission (SFC), announced implementing a series of measures to strengthen information dissemination and investor education in response to recent public concerns about unregulated virtual asset trading platforms (VATPs).

The new regulations were immediately implemented due to the ongoing JPEX Crypto scandal, which was one of the worst instances of financial fraud to have ever occurred in the area. JPEX was charged with promoting its services to people in Hong Kong, despite having applied for a license there. 

The SFC has long recognized the potential advantages to the financial markets that the underlying technology used in digital finance and virtual asset (VA) activities can provide. However, these activities have risks like decentralization, money laundering, and investor protection issues. 

The new licensing regime for centralized VATPs has filled the gap in the SFC’s licensing and supervision powers over VATPs under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) (AMLO), which went into full effect on June 1, 2023. 

The Investor and Financial Education Council (IFEC), a division of the SFC, and the SFC have been working closely to inform and caution investors about the dangers of trading on unregulated platforms.

The SFC announced that it would publish a list of all licensed, deemed licensed, closing down, and application-pending virtual asset trading platforms (VATPs) to help the public identify potentially unregulated VATPs operating in Hong Kong. 

The SFC's newly implemented measures to combat unregulated VATPs
The SFC’s newly implemented measures to combat unregulated VATPs

The SFC’s newly implemented measures to combat unregulated VATPs

The SFC will collaborate with the police to establish a special channel for exchanging details about suspicious activities and VATP violations, as well as to investigate the JPEX incident and apprehend those responsible.

Following the tenet of “same business, same risks, same rules,” the SFC will work with the HKSAR Government to periodically review Hong Kong’s regulatory framework and take appropriate action in light of recent market developments.

Also Read: Hong Kong’s SFC to Permit Licensed Platforms for Retail Investors

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