Hong Kong Securities Regulator Warns Investors of Unregulated Bitcoin Futures

Hong Kong Securities Regulator Warns Investors of Unregulated Bitcoin Futures

Hong Kong’s securities regulating agency has published a report reminding cryptocurrency investments and bitcoin contracts to comply with the regulations.

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Hong Kong’s securities regulating agency has published a report about the future of cryptocurrency investments and bitcoin contracts.

Published yesterday, the report from Hong Kong’s Securities and Futures Commission (SFC) reminded those offering crypto-investment products and bitcoin contracts that they must comply with the law when doing their business. The report was published at a time when a Chicago-based firm CBOE started to trade on its bitcoin contracts after it was launched on Sunday.

The securities admit that more Bitcoin Futures Contracts will be launched by several exchanges in the United States and will be controlled by the Securities and Futures Commission to offer automated trade services.
The regulator further notes that Hong Kong Investors will have a chance to trade in Bitcoin Futures using an intermediary that will be affiliated to these exchanges. However, any intermediaries or parties that want to offer bitcoin futures must obtain a license from the SFC. This law applies whether the intermediary or party are based in Hong Kong or not, as long as it targets the Hong Kong public.
The regulator also classified any operation that deals with bitcoin contract as a “Type2” controlled activity as stipulated in the Securities and Futures Ordinance laws. Marketing of bitcoin contracts was classified as a “Type 1” controlled activity (one that deals with various securities) while crypto-investments are deemed to be “Type 9” regulated activities.
The regulator also sensitized the Hong Kong public about some unregulated and unscrupulous cryptocurrency exchanges that were operating in the country. While it is unlawful for unregulated exchanges to provide cryptocurrency services without an operating license from the regulator, it cautioned investors of using exchanges that operate outside of Hong Kong. It highlighted about some of the risks that investors will have to bear if they defy their advice.
The SFC went ahead to outline some of the risks involved that included price volatility, insufficient liquidity, and possible market manipulation. Investors may also incur financial losses trading on cryptocurrencies (like swaps and options) using these fraudulent exchanges.
The circular by Hong Kong’s securities regulator comes at a time there are various bitcoin contracts that are being launched by the CME, which is a renowned derivatives exchange in the world.
The move by the SFC will help to protect the interests of the Hong Kong investors by ensuring that they can invest securely in a conducive environment. It will prevent unscrupulous cryptocurrency traders from taking advantage of innocent investors. This article is a must-read for all cryptocurrency enthusiasts who live and work in Hong Kong.