Hong Kong Orders Exchanges to Delist Securities Tokens

[alyssa85]

https://www.coindesk.com/hong-kong-orders-crypto-exchanges-delist-tokens-deemed-securities/

Hong Kong's securities regulator appears to be stepping up efforts to regulate cryptocurrency exchanges involved with initial coin offerings (ICOs).

In a statement released Friday, Hong Kong's Securities and Futures Commission (SFC) revealed it has sent warning letters to seven cryptocurrency exchanges advising that certain tokens being traded on their platforms may be defined as securities. Though the names of the exchanges were not disclosed, the SFC indicated they are either based in or connected to Hong Kong, and among the top 20 in volume globally.

According to the note, the move is part of a wider effort by the SFC to caution investors about the risks of trading cryptocurrencies, one that began more mildly with a warning on the possible risks of the ICO fundraising model on Sept. 5 of last year.

Notably, the SFC said that the inquiry may result in further action, but that so far the exchanges notified all responded to the inquiry.

"Most of these cryptocurrency exchanges either confirmed that they did not provide trading services for such cryptocurrencies or took immediate rectification measures, including removing relevant cryptocurrencies from their platforms," the release reads.

The SFC has also written to seven unnamed ICO organizers that are soliciting investors from Hong Kong and whose tokens are considered as securities by the agency.

I think Bitfinex is one of these exchanges, as is Binance.

[tomkat]

https://www.coindesk.com/hong-kong-orders-crypto-exchanges-delist-tokens-deemed-securities/

Hong Kong's securities regulator appears to be stepping up efforts to regulate cryptocurrency exchanges involved with initial coin offerings (ICOs).

In a statement released Friday, Hong Kong's Securities and Futures Commission (SFC) revealed it has sent warning letters to seven cryptocurrency exchanges advising that certain tokens being traded on their platforms may be defined as securities. Though the names of the exchanges were not disclosed, the SFC indicated they are either based in or connected to Hong Kong, and among the top 20 in volume globally.

According to the note, the move is part of a wider effort by the SFC to caution investors about the risks of trading cryptocurrencies, one that began more mildly with a warning on the possible risks of the ICO fundraising model on Sept. 5 of last year.

Notably, the SFC said that the inquiry may result in further action, but that so far the exchanges notified all responded to the inquiry.

"Most of these cryptocurrency exchanges either confirmed that they did not provide trading services for such cryptocurrencies or took immediate rectification measures, including removing relevant cryptocurrencies from their platforms," the release reads.

The SFC has also written to seven unnamed ICO organizers that are soliciting investors from Hong Kong and whose tokens are considered as securities by the agency.

I think Bitfinex is one of these exchanges, as is Binance.

Binance is currently inaccessible. They were supposed to finish maintenance today, but they're totally offline now.
I wonder what is going on with them.
Also, would be good to have the list of the tokens that SFC requested to remove from exchanges. Anyone knows something?

[BountyGo]

Yes, looks like Binance is one of these exchanges (unavailable now)

[alyssa85]

Also, would be good to have the list of the tokens that SFC requested to remove from exchanges. Anyone knows something?

Here is the original SFC statement:

http://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=18PR13

It doesn't say which tokens it wants delisting. But it does say this:

ICOs are essentially crowdfunding by blockchain start-ups. ICO issuers are typically assisted by market professionals such as lawyers, accountants and consultants for advice to structure the offering as utility tokens to fall outside the purview of the SFO and to circumvent the scrutiny of the SFC.

"We will continue to police the market and enforce when necessary," said Mr Ashley Alder, the SFC's Chief Executive Officer. "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."

Investors have complained to the SFC that they were unable to withdraw fiat currencies or cryptocurrencies from their accounts opened with cryptocurrency exchanges. Some complainants claimed that cryptocurrency exchanges had misappropriated their assets or manipulated the market, or that technical breakdowns of the exchanges' platforms caused them significant losses. Several complaints against ICO issuers alleged unlicensed or fraudulent activities.

The bit about being unable to withdraw fiat currencies surely applies to Bitfinex. And the bit about technical breakdowns on the exchanges causing losses is interesting. And it's also interesting that the SFC thought to make that point explicit in their statement.

I guess exchanges in Hong Kong are on notice that they might be liable if their "technical breakdowns" are timed badly.

[timerland]

It's good that the Hong Kong government is trying to crack down on this... And make a safer place for traders to trade on.

Obviously if any tokens are classified as unregulated securities then they've got to be taken down. Binance's upgrade that took ages could have been the result of all this new Hong Kong government requirements.

We still don't know what tokens they are talking about here, though.

Pretty much every single ICO token can be classified as a "security", if it represents a share of a network.

[Samarkand]

...
Pretty much every single ICO token can be classified as a "security", if it represents a share of a network.

Your opinion is pretty much in line with what the chairman of the
CTFC testified in the senate hearing during this week. He said something
along the lines of "I´ve yet to see an ICO that is not a security".

I have to admit that ICOs were a clever workaround for the excessive
regulations that surround fundraising of any kind. However, regulators are
now aware of this and they will render regulations for this industry now.
Hong Kong is just following what other countries already did (e.g. South Korea).

[alyssa85]

We still don't know what tokens they are talking about here, though.

Pretty much every single ICO token can be classified as a "security", if it represents a share of a network.

I'd assume all ICO tokens are banned, and only open source cryptocurrencies that can be mined are eligible to be traded.

If people have tokens on the Hong Kong exchanges, I'd move them now.

[1Referee]

I'd assume all ICO tokens are banned, and only open source cryptocurrencies that can be mined are eligible to be traded.

If that's really the case, then that should be a decent first step to start dealing with a wide spread problem. I am all in favor of such measures. It may seem like it is limiting the overall freedom, but it's a much needed step that needs to be set in order to progress forwards. That capital should be parked in crypto coins, and not in ICO tokens filling the pockets of scammers.

If people have tokens on the Hong Kong exchanges, I'd move them now.

Just selling them is enough and is the only smart thing to do, and sell Ethereum as well before authorities start taking over this approach globally. Ethereum thrives on ICO's, and when you see authorities take away a major chunk of the demand resulting in Ethereum to be where it is right now, then it's safe to say that people are an utter idiot for holding Ethereum at current levels.

[alyssa85]

If people have tokens on the Hong Kong exchanges, I'd move them now.

Just selling them is enough and is the only smart thing to do, and sell Ethereum as well before authorities start taking over this approach globally. Ethereum thrives on ICO's, and when you see authorities take away a major chunk of the demand resulting in Ethereum to be where it is right now, then it's safe to say that people are an utter idiot for holding Ethereum at current levels.

Yes. Most of what is coming out of the regulators hurts Ethereum more than Bitcoin or other cryptos. Same goes for the ban on ads on Facebook - pretty much all of them were for ICOs.