Hong Kong SFC Attempts To Clean Up Crypto Industry On Heels Of JPEX Scandal

Following the crackdown on crypto exchange JPEX, currently embroiled in a HK$1.3 billion ($166 million) scandal, Hong Kong's Securities and Futures Commission (SFC) is taking decisive steps to bolster transparency and investor protection.

One of the most notable actions is the publication of a list of virtual asset trading platforms (VATP) applicants, ensuring that the public is well-informed about entities seeking licensing in the region.

This move is part of the SFC's broader initiative to enhance information dissemination.

The JPEX incident underscores the timeliness and relevance of events like Benzinga's Future of Digital Assets conference scheduled for Nov. 14. This conference, renowned for gathering industry leaders, innovators, and regulators, aims to address the challenges and opportunities in the rapidly evolving digital asset landscape.

The SFC stated it has always been proactive in recognizing the potential of digital finance and virtual asset activities, however, the commission has identified challenges such as decentralization, money laundering, and investor protection issues.

To address these, the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) was put into effect on June 1.

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This ordinance empowers the SFC with enhanced regulatory oversight over VATPs, ensuring they adhere to robust governance measures.

To further safeguard retail investors in the wake of the JPEX incident, the SFC has imposed additional requirements on licensed VATPs.

These include a rigorous onboarding process, enhanced token due diligence, and stringent admission criteria.

By leveraging various sources, including media reports, industry dialogues, and public complaints, the commission aims to detect and address potential legal breaches.

In partnership with the Investor and Financial Education Council (IFEC), the SFC is also gearing up to launch a public awareness campaign.

This initiative will focus on educating the public about the risks associated with virtual assets and potential fraud, using platforms like mass media and social media.

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Hong Kong image via Pixabay