In the wake of the recent JPEX scandal (read our previous article here), the Securities and Futures Commission (“SFC”) has taken several steps to enhance investor protection and awareness of VATPs.
VATP Lists
The SFC announced on 29 September 2023 that it had published several lists concerning virtual asset trading platforms (“VATPs”) as part of its efforts to disseminate information on VATPs in a clear, transparent and timely manner:
- List of VATPs formally licensed by the SFC;
- List of VATP applicants, which have yet to be approved by the SFC;
- List of VATP applicants whose applications have been returned, refused or withdrawn;
- List of VATPs required to be closed down within a specified period; and
- List of VATPs deemed to be licensed as of 1 June 2024.
The SFC has also issued a list of suspicious VATPs to help investors identify known suspicious VATPs operating in Hong Kong.
Working Group on VATPs
On 4 October 2023, the SFC and Hong Kong Police Force (“HKPF”) formed a dedicated working group to enhance collaboration in monitoring and investigating illegal activities related to VATPs (“Joint Working Group”).
The Joint Working Group comprises representatives from the HKPF’s Commercial Crime Bureau, Cyber Security and Technology Crime Bureau and Financial Intelligence and Investigations Bureau and the SFC’s Enforcement Division and Intermediaries Division. The Joint Working Group was set up to:-
- Facilitate the sharing of information on suspicious activities and breaches of VATPs;
- Implement a mechanism to assess the risks of suspicious VATPs; and
- Enhance coordination and collaboration in related investigations.
Hauzen LLP’s Thoughts
The publication of the lists of VATPs and establishment of the Joint Working Group are much welcome, and much needed.
By providing a comprehensive and up-to-date record of licensed VATPs, the SFC enables investors to make informed decisions when engaging in digital asset transactions. This collaboration between law enforcement and regulatory authorities is also vital in maintaining the integrity of Hong Kong’s financial ecosystem. It is hoped that the Joint Working Group will facilitate the sharing of intelligence and expertise, allowing for a more comprehensive understanding of emerging trends and potential threats in the VATP space.
The above measures are also important to alleviating investor concerns in the fallout of the JPEX incident, particularly in light of the Hong Kong government’s recent efforts in positioning the city as one of the world’s leading digital asset hubs, coupled with criticism in some quarters of the SFC’s perceived lack of early and decisive action against JPEX.
Having said the above, it is hoped that regulatory authorities can mitigate obvious risks without investors having to first suffer substantial losses. Proactive measures, such as the publication of lists of VATPs, are pre-emptive measures that could have been easily taken before the JPEX incident.
To find out more, contact us today for a discussion.