Alleged fraudulent activities involving unlicensed virtual asset trading platform JPEX have brought regulatory frameworks into question in Hong Kong.
Hong Kong Authorities Emphasize Need for Regulation After JPEX Fraud Case
Minister of Financial Services and Treasury Christopher Hui, in his statement on the live broadcast of the Investment and Financial Education Committee today, stated that the seriousness of the JPEX incident emphasizes the need for strict regulations.
He also noted that Hong Kong currently lacks a regulatory framework for stablecoins and as a result individual trading will not be allowed at this time.
He explained that investing in unregulated platforms comes with high risks due to their lack of transparency and potentially unstable operations.
If investors have a dispute with these platforms, they may not have an authority to apply for their complaints.
In case of closure of platforms, suspension of operations, fraud, default or even theft, investors are likely to lose all the assets they have stored on these platforms.
Hui cited the closure of FTX overseas at the end of last year and the recent JPEX case in Hong Kong as examples.
Securities and Futures Commission Fintech Chair Clara Wong stated that platforms should be relatively neutral and avoid conflicts of interest.
Currently, licensed virtual asset trading platforms under the SFC are not allowed to provide such trading services.
Wong also noted that currently licensed platforms only allow individual trading of Bitcoin (BTC) and Ethereum (ETH).
*This is not investment advice.