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Hong Kong regulator issues cryptocurrencies warning

Hong Kong regulator issues cryptocurrencies warning

Hong Kong’s securities watchdog has warned local cryptocurrency exchanges over trading in some digital tokens issued by companies to raise capital. The notice from the Securities and Futures Commission comes as regulators around the world take aim at bitcoin and the cryptocurrency market, which is still largely unregulated. The SFC said on Friday that it had sent letters to seven Hong Kong exchanges advising them not to trade in initial coin offerings, or ICOs, that have the characteristics of securities. Over the past year, ICOs have become a popular alternative for start-ups to raise capital through direct online sales. While most of the coins are designed specifically to avoid security-like traits, regulators have noted that some issuances may still fall under their purview. “We will continue to police the market and enforce when necessary,” Ashley Alder, the SFC’s chief executive, said in a statement. “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 said previously that ICOs giving shareholder rights, such as rights to dividends, or creating debt or liabilities owed to the buyer, would be considered securities. The watchdog added on Friday that most of Hong Kong’s cryptocurrency exchanges had either confirmed that they did not trade in coins that resemble securities or had removed such coins from trading. Aurélien Menant, founder and chief executive of Gatecoin, a Hong Kong cryptocurrency exchange, said the exchange had already delisted five or six tokens that could be classed as securities following an earlier SFC statement on ICOs in September. The general manager of the Bank for International Settlements said earlier this week that bitcoin and other cryptocurrencies had become a “threat to financial stability” and must be stopped. A member of the European Central Bank’s executive board made similar comments on Thursday, and China’s central bank has reportedly clamped down on the marketing of ICOs by blocking foreign websites that market them. FT Engage Bitcoin after the bubble: is the crypto revolution here to stay? Join us to discuss what’s next for bitcoin and blockchain, with David Gerard, author of the ‘Attack of the 50 Foot Blockchain’, and Alex Batlin, founder of Trustology, on February 27 in London TUESDAY, 1 MAY, 2018 The price of bitcoin peaked in mid-December at above $19,000 per coin but has since collapsed to below $7,000. By January, the total market capitalisation for cryptocurrencies hit more than $300bn, up from just $18bn at the start of 2017. The hacking of $530m in investors’ funds from Japan’s Coincheck shook the cryptocurrency market in late January. The incident was the largest hack of its kind so far and has called into question the safety of exchanges that now hold hundreds of millions of dollars worth of digital assets. Other major recent exchange attacks include that on South Korea’s Youbit, which lost 17 per cent of its assets in December, and the $450m raid of Tokyo-based Mt Gox in 2014. From FT

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