Hong Kong securities regulator has once again warned the public about Initial Coin Offering investment. The deputy chief of Honk Kong SFC (Securities and Futures Commission), Julia Leung, repeated the previous concerns of perils related to ICOs, in a speech which took place on Friday.
While emphasizing that the interests of regulators lie in protecting the investment of public first, Leung said:
“While we acknowledge that innovative technologies such as blockchain have the potential to improve efficiency and financial inclusion, that does not entitle anyone to conduct fundraising from the public in violation of securities law.”
Obscurity for Investors
As Leung is the chair of the SFC’s Fintech Advisory Group, she claimed that it would be difficult for an average investor to decrypt the extreme-technical-content and obscurity of few projects that are in quest of fundraising, as she stated that it was more suitable for proficient investors from VC funds instead. Her remarks then drew the attention to projects that claim to use blockchain technology as a “slogan” to vow high-tech claims without any innovation to fulfil those promises.
Julia Leung also added:
“Many of these fundraisings are dubious, if not downright frauds. The issuers escape the scrutiny of the police or securities regulators because of their cross-border nature and the way the crypto assets are structured to fall outside any regulator’s perimeter.”
Warning Against ICOs
These comments pursue an earlier statement, in which guidelines were provided for ICO issuers that must be followed ahead of fundraising operation. Certain ICOs could be considered as securities as well, according to Leung. Since the scrutiny, the regulator has issued a warning letter to almost seven exchanges along with domestic presence, prompting them not to trade cryptocurrency tokens as it sees them as securities without a license.
The regulator said:
“The SFC will continue to closely monitor ICOs and will not tolerate any violations of the securities laws of Hong Kong.”
Seeing growing public interest, the authorities of Hong Kong launched a “public awareness campaign” at the beginning of this year to enlighten general public about the Initial Coin Offering investment and cryptocurrencies by using, articles, advertisements, and infographics.
In her speech, Leung also pointed out the volatility of bitcoin price and added:
“Many millennials who subscribe to digital tokens in ICOs5 understand that there is no intrinsic value in the tokens but are betting on the rapid rise of the token value in the secondary market.”