As part of its strategy to enlighten investors about safe crypto firms to use, Hong Kong is releasing the list of crypto firms that applied for its newly launched retail crypto trading licenses. This new decision was informed by the JPEX’s incident last week, involving users’ funds of over $3 million.
According to the Securities and Futures Commission, the list will contain the names of licensed virtual asset trading platforms (VATPs), a list of closing-down VATPs, a list of VATPs deemed licensed as of June 1, 2024 and a list of VATP applicants “in light of public demand.”
“To help the public more easily identify suspicious VATPs doing business in Hong Kong and enhance awareness, the SFC will enhance and issue a dedicated list of suspicious VATPs which is easily accessible and with prominence on the SFC’s website,” the regulator said in a statement on Monday.
JPEX, an unregistered crypto trading platform operating in Hong Kong came under regulatory pressure when many of its users registered complaints with the authorities concerning their funds.
The SFC took action and reported to the police, who have made several arrests concerning the case, including a social media influencer, Joseph Lam for promoting the company. The SFC blamed the incident on crypto investors not knowing which companies to deal with, as JPEX claims it has applied for virtual asset license in Hong Kong.
The Director of Licensing and Head of Fintech Unit, Intermediaries of the SFC, Elizabeth Wong stated at a press briefing on Monday that the publication of the list of applicants allows the public to scrutinize whether a particular platform has made false statements regarding license applications. According to Wong, there are currently four companies in the preliminary process of applying for licenses.
Hong Kong Takes Enforcement Action
Hong Kong is one of the budding crypto havens in the world, with its friendly approach towards crypto and crypto firms. From all indications, the region is open to all crypto firms interested in operating within its jurisdiction, and recently released guidance for applying for its licenses.
However, because of the proliferation of criminal activities around crypto, the authorities have decided to take enforcement action against fraudulent crypto firms, and the release of this list is one of the steps towards this direction. The police also raided 20 locations related to JPEX operations last week, an action that JPEX described as unfair.
“It is very encouraging that Hong Kong is ready to take enforcement action on unlicensed and criminal activities, and it is likewise very positive to see that also those individuals who have coerced often uninformed investors to trade on JPEX, so-called ‘KOLs’ and ‘influencers,’ are held liable for their actions,” Donald Day, chief operating officer of Hong Kong-based crypto platform VDX, told The Block in a statement.
JPEX in a new announcement on Sunday told its Hong Kong customers to “temporarily cease depositing new assets and crypto-assets into the platform.”
Sanitizing the Crypto Hub
Hong Kong’s enforcement action may be a much needed decision to clean up the region and make it not just a global crypto hub, but to make it a safe one.
The authorities have demonstrated willingness to make the place a leader in financial innovation, but this cannot be achieved with fraudulent firms springing up in it.