Hong Kong is taking a Tough Stance on ICOs
The regulatory body charged with futures and securities in Hong Kong has recently taken on a very skeptical tone towards the ICOs or initial coin offerings. This was underlined during a speech where Julia Leung, acting as the Hong Kong’s deputy head of SFC (Securities and Futures Commission). There, she said that the public should be very cautious in regards to fundraising procedures that use the ICO principle.
She acknowledged that the technologies like blockchain can improve financial inclusion and efficiency, they do not allow anyone to conduct a process of fundraising. This is a violation of the securities law and because of that, it should not be tolerated. Leung also said that many ICOs simply masquerade as innovative technology systems but actually provide no tech innovation. This poses a huge risk to any potential investor.
Leung stated that many of these ICOs are either dubious or downright scams, which further complicates their existence. So far, these ventures escaped the securities regulators or even the police because they come as a cross-border process. At the same time, the cryptocurrencies used for ICOs fall under no regulation so they are easily employed for this purpose. The statement comes only weeks after the SFC decided to stop an ICO project because they believe that it was offering securities in Hong Kong that were not registered. Not long before that, the SFC asked several Hong Kong digital exchanges to de-list certain cryptocurrencies because they were funded by ICOs that were not regulated or verified. Related to this, many are expecting additional pressure on the exchanges like it was the case of Coinbase in the US recently showed.
Interestingly, the SFC is also beginning an education process for the public about the risks of crypto investment. With the start of 2019, the same agency started a media campaign to dampen the big hype over the ICO investment possibilities. During her speech, Leung compared the crypto investor mindset with that of a gambler’s. According to her, many of ICO investors, especially those from the millennial generation, are putting their money into ventures that possess no intrinsic value whatsoever.