Hong Kong Issues Warning Against 7 Crypto Exchanges for Violating Regulations

The Securities and Futures Commission (SFC) of Hong Kong has flagged 7 crypto trading firms as unregulated companies. With this nomination, the regulatory agency intends to add these companies to the list of unregulated entities that are operating without authorization and pose a threat to the security of local investors.

On this front, SFC officials have also issued alerts against these firms and notified the public that they are operating without operational license. The SFC supervises the public records of all regulated, unregulated, and illegal crypto firms as a way to reduce their risk exposure to scam and fraudulent projects.

This list is accessible to the members of the public and serves as an Alert List that has the potential to highlight trading platforms that are unlicensed or make false claims of association with SFC.

The SFC regulators added more exchange platforms to this list on 5th July. SFC has continued to maintain and update this alert list since 2020. At the time of publication, the list consists of 39 firms. In the ongoing year, SFC flagged 28 platforms.

The latest firms added to this list are companies such as Bittones.org, CEG, Yomaex, Taurusemex, XTCQT, Bstorest, and BTEPRO.

SFC Warns Investors About Unregulated Crypto Trading Platforms

SFC has issued an alert for local investors to refrain from interacting with local trading platforms that do not have a regulatory license. The agency has warned investors about the risk associated with dealing with unregulated exchange platforms such as being trapped in a fraudulent project or an attempt to dupe investors into trusting that they have a registration with SFC.

Most of these exchange platforms resort to questionable practices such as extortion, blockade of withdrawals, and imposing higher fees to allow investors to keep trading.

Hong Kong’s Approach Towards Crypto

Since the start of the ongoing year, Hong Kong regulators have taken up an aggressive approach to ensure regulatory compliance for crypto trading services in the country. SFC has also directed all exchange platforms to apply for a license before 31st May 2024.

After this deadline, the companies that failed to apply for an operational license were legally obligated to shut down operations.

During this grace period, more than 22 crypto trading platforms applied for a certification in order to continue operating in the jurisdiction. However, eventually, a number of firms ended up withdrawing their applications before the deadline.

Hong Kong officials have also retained policies as a way to ease foreign investors to the region. As part of this policy, delegates attended a tech conference in Toronto, Canada and marketed a foreign ready-to-move tech hub for Canadian crypto and Web 3.0 startups.

Hong Kong to List First-Ever Inverse Bitcoin ETF

SFC has received an application for an inverse Bitcoin ETF filed by CSOP. As per the details, the firm called CSOP has filed for a Bitcoin Future Daily and Inverse Product. This ETF is backed by the biggest asset management firms in China.

It aims to allow investors to capitalize on the bearish movement of Bitcoin. CSOP successfully completed the launch of Bitcoin Futures ETF in December 2022.

The CSOP Bitcoin Futures Daily Inverse Product is set to enable investment profits that are aligned with the inverse daily performance of the S&P Bitcoin Futures Index. This fund has a futures-backed replication strategy.

In this manner, it invests directly into spot-month Chicago Mercantile Exchange Bitcoin Futures. As per CSOP, the new product is set to be listed at the Hong Kong Stock Exchange (HKEX) with an initial price projection of 7.8 Hong Kong dollars per unit.

Zeta Market founder Tristan Frizza told journalists that Inverse Bitcoin ETF is a sign of increasing sophistication of crypto investment vehicles on an international scale. The executive further noted that an investment instrument that allows investors to place bets against the spot market has the potential to minimize the speculative forces and pave the way for long-term stability and acceptance of cryptocurrencies as a viable investment.