September 27, 2023
By Sharan Kaur Phillora
Hong Kong’s Securities and Futures Commission (SFC) has announced it will publish a list of all cryptocurrency exchange license applicants, following an investigation into JPEX that resulted in multiple arrests.
Here’s what we know:
This move is a response to the JPEX incident, which underscored the risks associated with unregulated Virtual Asset Trading Platforms (VATPs) and highlighted the need for enhanced regulation to maintain market confidence.
“The JPEX incident…shows that dissemination of information to the investing public through the Alert List, warnings, and investor education can be further enhanced,” the SFC said in a statement on Monday. Last week, Hong Kong’s Chief Executive, John Lee, underscored the importance of licensing crypto platforms through the SFC to safeguard investors and emphasized the need for increased public education on investment risks.
So far, only OSL Digital Securities Limited and Hash Blockchain Limited have secured licenses. Meanwhile, four smaller companies, HKVAX, HKBitEx, Hong Kong BGE Limited, and Victory Fintech Company Limited, have submitted their applications. Notably, many major crypto exchanges have yet to express their intention to apply for licenses in Hong Kong.
In addition to applicants, the regulator will disclose names of licensed VATPs, those closing down, and deemed-to-be-licensed VATPs, citing public demand. The SFC’s stance on mandatory licensing for all crypto platforms within its jurisdiction is seen as a positive development by the broader industry.
The JPEX probe was initiated after the platform, targeting Hong Kong residents, falsely claimed it was awaiting a license in Hong Kong, leading the SFC to label JPEX as fraudulent. Subsequent involvement by Hong Kong police saw several arrests, including influencers Joseph Lam Chok and Chan Wing-yee.
Authorities reportedly received complaints from 1,641 investors regarding JPEX, involving HK$1.2 billion ($128 million) in crypto assets. This incident marks the largest financial fraud in the Chinese autonomous administrative region, prompting calls for heightened regulatory measures and public awareness to help investors understand the potential risks associated with VATPs and suspicious websites.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.