The Securities and Futures Commission in Hong Kong has warned investors of the risks of trading cryptocurrencies as it pursues regulatory action on at least 14 companies.
The commission says it has sent letters to seven cryptocurrency exchanges and seven issuers of initial coin offerings (ICOs) to urge them to comply with its rules. Among other things, the rules state that exchanges should not trade cryptocurrencies that are considered securities without a licence.
“We will continue to police the market and enforce when necessary,” said Ashley Alder, chief executive of the commission. “But we are also urging market professionals to do proper gatekeeping to prevent frauds or dubious fundraising and to assist us in ensuring compliance with the law.”
The commission says it has received complaints that investors have been unable to withdraw hard currency from cryptocurrency exchanges. Other users have claimed that exchanges have manipulated the market or that ICO issuers have engaged in fraud.
“If investors cannot fully understand the risks of cryptocurrencies and ICOs or they are not prepared for a significant loss, they should not invest,” said Julia Leung, the commission's executive director of intermediaries.
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