Hong Kong Continues Clampdown on Fraudulent, Unregistered Crypto Exchanges

Hong Kong's SFC had previously set a deadline of February 29 for crypto firms to apply for a license to operate in the region.

Written by Radhika Parashar, Edited by David Delima | Updated: 26 March 2024 20:15 IST

Hong Kong Continues Clampdown on Fraudulent, Unregistered Crypto Exchanges

Photo Credit: Reuters

All unregistered crypto platforms must shut down in Hong Kong on May 31

Highlights

Hong Kong was one of the most crypto friendly regions in 2022
The SFC is aiming to ensure its crypto space is safe with new rules
India has deployed similar rules to safeguard its crypto community

Hong Kong is continuing its efforts to regulate crypto exchanges and crack down on those that are fraudulent and unregistered in the special administrative region (SAR) of China. The cryptocurrency market, currently valued at $2.60 trillion (roughly Rs. 2,16,86,900 crore), has attracted both legitimate entrepreneurs and unscrupulous groups from around the world in recent years. New crypto exchanges have cropped up globally, making it challenging for investors to know whether these platforms are genuine or designed to scam users. Hong Kong aims to ensure that all exchanges operating within the region are legitimate and registered with relevant authorities.

The Securities and Futures Commission (SFC) of Hong Kong recently reminded existing crypto exchanges operating in the region that the deadline to apply for an official operational licence had passed. After May 31, Hong Kong will not allow crypto businesses without this permission to continue.

A total of 22 crypto trading platforms in Hong Kong applied to receive this the licence in recent months. These include Hing Kong BGE Limited, Victory Fintech Company Limited, and DFX Labs among others, according to a CoinTelegraph report.

On the sidelines of authorities increasing oversight over crypto exchanges, the SFC has expressed its concerns with one particular platform — HKCEXP. The authorities have warned people against engaging with this platform as it is suspected to be part of ongoing crypto frauds.

The HKCEP has reportedly misled investors, falsely claiming to be registered with the SFC, the commission stated in a press release on Monday.

The SFC blocked a number of non-compliant crypto platforms in March. In order to keep its citizens aware about licenced platforms, Hong Kong has decided to maintain this list on its website.

The government of India has also incorporated similar measures to safeguard its investor community against scams and financial thefts. In December 2023, the Financial Intelligence Unit India (FIU) issued show cause notices to nine offshore companies asking them to proof that they were following all of India's rules. These firms include Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.

In India, all crypto-related firms are required to follow the Anti-Money Laundering and Counter-Financing of Terrorism (AML-CFT) framework. Both of these laws fall under the provisions of the Prevention of Money Laundering Act (PMLA) Act.

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Further reading: Cryptocurrency, Hong Kong, Crypto Exchanges

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More