Exchanges operating outside of the law, allowing rampant speculation and gambling on fraudulent projects and criminal money laundering, might be able to continue their operation for a little while longer, but regulators are on to them. Specifically, the Securities and Futures Commission (SFC) of Hong Kong is sitting up and taking notice.
Local outlet The Standard reports that Thomas Atkinson, an executive director with responsibility for the enforcement division of the SFC, said that the fraud going on with initial coin offerings (ICOs), trading and cryptocurrency sales have become concerning.
At the moment, he said that the structure of some exchanges are beyond the scope of the SFC (and likely other regulators), and while that’s the case, it is a “buyer beware” market.
That won’t always be the case though. He specifically noted that the SFC is working with legal and compliance experts about how to change the status quo, and to gain a supervisory foothold on cryptocurrency exchanges.
In March, the SFC warned investors that if they were to wade into the cryptocurrency market, that securities tokens specifically are to be considered securities, and should be licenses or registered in Hong Kong as such. If they aren’t, the weight of the law could come down on the whole enterprise, making it very wise to stay away from them.
Hong Kong’s SFC isn’t the only regulator looking to crack down on exchanges that are flouting the law. Japan recently declared their intention to strengthen their anti-money laundering (AML) and know your customer (KYC) laws, forcing exchanges to apply the same rules that traditional financial institutions have had to follow for decades.
These moves are necessary to help the cryptocurrency industry grow up from it’s infantile past of criminality into a well-respected financial force in the world. As CoinGeek founder Calvin Ayre recently stated, he was attracted to Bitcoin SV (BSV) specifically because it’s regulator friendly.
The cryptocurrency industry doesn’t have a choice when it comes to working towards a regulated future. Without it, governments will fight it every inch of the way, and it will never realize its full potential. It needs to work with entities like the SFC because that’s the only way digital currency can find success in the near future.
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