Hong Kong regulator warns crypto exchanges of increased scrutiny
Hong Kong regulator warns crypto exchanges of increased scrutiny
The Hong Kong Securities and Futures Commission (SFC) has warned companies providing services in the region's crypto sector to strictly comply with the regulator's regulatory framework.
The SFC issued the warning to crypto exchanges, paying particular attention to cryptocurrency derivatives trading and cryptocurrency exchange earning services.
According to the regulator, the said activities are not allowed under the current legislation, and exchanges that allow deviations from the rules will not be licensed during the transition period, reports Bitcoinsistemi.
The SFC also officially warned all cryptocurrency exchanges and cryptocurrency service providers to tighten control over compliance with the current regulatory framework.
The regulator was forced to make such a statement amid the growing popularity of crypto trading in Hong Kong.
The SFC argues that cryptocurrency derivatives and staking are related to "securities" under the Securities and Futures Ordinance (SFO).
As such, any company offering these types of crypto services must be licensed by the regulator, and failure to do so will result in serious consequences for offending companies.
The SFC has stated that it will closely monitor the activities of crypto exchanges providing services in Hong Kong during the transition period.
It is likely that unlicensed companies will face legal action from the SFC, up to and including criminal charges.
See also: The head of Bitstamp revealed plans to expand the exchange.
