Hong Kong’s Financial Watchdog SFC Cautions Investors About Digital Tokens And ICOs

The Securities and Futures Commission of Hong Kong issued a warning on Monday regarding the ICOs (initial-coin-offerings) and digital tokens stating that there could be a chance for such things to be linked to unauthorized CISs (collective-investment-schemes). The commission advised that the investors should be careful while dealing with them.

The SFC issued the warning after it suspected and entered the LABS-Security-Token as well as two CIS-related projects to its record of Suspected-Unauthorized-CIS-Alert-List. The LABS Group issued the ‘LABS’ token, which permits for making small investments into the projects related to real estate. SFC, in a news release, revealed that CIS (or other collective-natured investment products) provided to the community in the country must be authorized from SFC unless they are exceptional to be exempted. It added that the selling of CIS must be done through the intermediary license or registration of SFC, and if any institution does otherwise, it will pose an offence to the market.

As SFC has set a limit for unauthorized CIS to be purchased by the professional investors, otherwise by the individuals who have portfolios of more than HK$8 million (approximately USD 1.03). It has told that the investors should be very watchful while planning for an investment into any CIS which is not registered with SFC. For this purpose, they have to do proper work for acquiring adequate information about the respective scheme.

The arrangements for unauthorized investment are tremendously risky, and there is a chance for the investors to lose their entire investments, as mentioned by Christina Choi (the investment products director at SFC). She further disclosed that the investors are encouraged to check out the latest alert list of the regulatory department for figuring out whether or not an arrangement is an SFC authorized.

The department has been making active participation in the digital assets. In July, it warned Binance (the biggest crypto exchange across the globe according to trade volume) that the organization was not permitted to carry out any regulated activity within the city, especially the stock token trading. Since then, Binance has halted its support regarding stock tokens as well as relaxed its offering of derivatives products to the consumers within Hong Kong. The country possesses the regulatory framework of the most detailed and clearest licensing requirements for the service providers of digital assets (VASPs).