- JPEX’s suspected involvement in a fraud case raises concerns about crypto regulation in Hong Kong.
- Experts emphasize the risks of unregulated crypto platforms and the need for oversight.
- Licensing authorities require new digital currencies on authorized platforms to seek approval from regulatory bodies.
Frauds and scams in the crypto-landscape are becoming an increasingly common malpractice. Unfortunate incidents in which innocents become victims of manipulation have recently seen a tremendous high, and in the same light, we have JPEX today. A virtual asset trading platform, JPEX, is suspected of conspiring to commit fraud, and this has led to public comments about the regulatory system in Hong Kong. Let’s dive into the details.
Following the suspected involvement of JPEX in a fraud case, Hui Ching-yu, the Secretary for Financial Services and the Treasury, has addressed the concerns. He emphasized the pressing need for enhanced supervision in response to such incidents.
Furthermore, he highlighted the absence of a regulatory framework for stablecoins in Hong Kong at present and clarified that they will not be permitted for retail sales in the foreseeable future. During an online broadcast by the Investment and Financial Education Committee, Xu Zhengyu expressed his belief that the public’s attention had been drawn to a major fraud case involving an unlicensed virtual asset trading platform.
Xu stressed the inherent risks associated with unregulated platforms, underscoring the vital role of oversight. He also explained that unregulated platforms pose substantial risks for investors due to their lack of transparency and potential instability in operations.
He pointed out that in the event of disputes with such platforms or their insolvency, fraud, contract breaches, or security breaches, investors could face the complete loss of their deposited assets. He cited examples such as the recent collapse of FTX overseas and the recent JPEX case in Hong Kong to illustrate the precarious nature of unregulated platforms.
Huang Lexin, Director of the Licensing Section and Head of the Financial Technology Group of the Intermediary Department of the SFC, additionally highlighted that presently, authorized platforms solely permit individual investors to trade Bitcoin (BTC) and Ethereum (ETH). In accordance with licensing prerequisites, any new digital currencies intending to be traded on these platforms must first submit a report to the China Securities Regulatory Commission and can only commence trading upon receiving official approval.