JPEX Aftermath: Hong Kong has only two licensed crypto firms
Hong Kong’s financial regulator, the Securities and Futures Commission (SFC), will disclose the names of cryptocurrency exchanges that have applied for trading licenses. This decision comes in response to criticism from both the cryptocurrency industry and lawmakers following its handling of a major crypto fraud case.
The SFC plans to publish lists of licensed virtual assets trading platforms (VATPs), those in the application process, as well as those that are no longer operational. Additionally, the regulator will maintain a list of “suspicious VATPs” on its website.
The regulator’s chief executive officer Julia Leung Fung-yee revealed that only two cryptocurrency trading platforms, OSL Digital Securities Limited and Hash Blockchain Limited, had obtained licenses to serve retail customers in the region. However, four additional companies have applied for licenses: HKVAX, HKBitEx, Hong Kong BGE Limited, and Victory Fintech Company Limited.
Lawmakers welcomed the move, with some describing it as an “an overdue spring” policy, but said more could be done by the SFC to strengthen regulations and boost investors’ faith in the system.
“We can say these physical stores face no oversight, on how they advertise and how they sell crypto. If we treat them as currency exchange platforms, should customs be responsible? What are the roles of the SFC and the Financial Services and Treasury Bureau? The government should tackle this issue as soon as possible,” said legislator Johnny Ng Kit-chong.
Hong Kong Chief Executive John Lee Ka-Chiu said last week that the territory’s regulators will conduct a thorough review of digital asset regulations, calling for the public to be wary of any opportunities that seemed “too good to be true”.
He indicated that crypto companies drawn by the city’s push to create a crypto hub should expect an exacting regulatory regime.
The scrutiny comes in response to the recent arrest of eight individuals involved in alleged fraud at an unlicensed cryptocurrency exchange. The fraud impacted more than 1,600 investors and over $150 million in assets. Those arrested include social media influencers who promoted the JPEX cryptocurrency exchange, as well as employees of JPEX.
The SFC received over 1,400 complaints against JPEX, with losses totaling more than 1 billion Hong Kong dollars. Additionally, some investors complained of being unable to withdraw their assets from JPEX accounts and noted discrepancies in their account balances, including reductions and alterations.
JPEX had been operating in Hong Kong for more than two years and run aggressive advertising campaigns, including placing ads in MTR stations in Central, Mong Kok, Tsim Sha Tsui, and Causeway Bay.
Actor-singer Julian Cheung Chi-lam has been featured on JPEX publicity materials as a brand ambassador since last August. His agent told local media that they had never agreed to run the campaign before JPEX secured a license.
