Hong Kong Securities Commission warns crypto exchanges against improper practices, derivatives trading


  • China’s Special Administrative Region’s securities regulator has warned projects that derivatives and earning services on crypto exchanges are not allowed. 
  • Companies operating during the transition period may not be granted licenses if they violate regulations. 
  • Exchanges that have not applied for a license and are operating in Hong Kong are committing criminal offense. 

Hong Kong’s securities regulator, the Hong Kong Securities Commission, has warned cryptocurrency exchanges that are operational within China’s Special Administrative Region (SAR) that derivatives and earning services are not allowed.

The regulator warned crypto exchanges that it is a criminal offense to operate without a license in Hong Kong.

Also read: PayPal makes strides in crypto payments with launch of US Dollar-pegged stablecoin

Hong Kong warns crypto exchanges operating in China’s SAR

Hong Kong’s securities regulator warned crypto exchanges and institutions that some unlicensed cryptocurrency exchanges engaging in “improper practices.” The regulator informed the community that unlicensed activities are considered criminal offense and will be dealt with in that manner.

The Securities and Futures Commission of Hong Kong (SFC) issued a statement explaining that not all crypto exchanges have licenses to operate, despite their claim that they have submitted applications to the regulator.

The SFC informed institutions that there is no room for exchanges making fraudulent and reckless misrepresentations. 

Is Hong Kong mirroring China’s crackdown on crypto?

While China has cracked down on crypto over the past few years, Chinese Special Administrative Region, Hong Kong, welcomed crypto exchanges and projects, encouraging them to roll out services to professional traders and trading firms.

In a series of statements issued in October, Hong Kong authorities presented their goal of emerging as a global crypto hub and welcomed exchanges and projects to enter Hong Kong. HashKey and OSL are two licensed crypto exchanges that onboarded users and kicked off their services on June 1.

Bitcoin, altcoins, stablecoins FAQs

What is Bitcoin?

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

What are altcoins?

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

What are stablecoins?

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

What is Bitcoin Dominance?

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.


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