Hong Kong Forms Collaborative Unit for Enhanced Cryptocurrency Exchange Oversight
Hong Kong‘s law enforcement and the primary regulatory body overseeing securities, the Securities and Futures Commission (SFC), have united to form a collaborative team aimed at overseeing suspicious activities occurring on cryptocurrency exchanges.
A statement from the SFC, released recently, explained that this joint task force was established following a high-level meeting held between both organizations on September 28.
The primary objective of this partnership is to strengthen their cooperative efforts in the monitoring and detection of dubious and illicit actions on Virtual Asset Trading Platforms (VATPs), commonly known as cryptocurrency exchanges.
The task force consists of personnel from various units within the police force, including Commercial Crime, Cyber Security Financial Intelligence, and Investigations divisions, alongside representatives from the SFC’s Enforcement and Intermediaries divisions.
The primary goal of this working group is to facilitate the exchange of information regarding suspicious or illegal activities on cryptocurrency exchanges, construct a system for evaluating the risk associated with such exchanges, and coordinate and unify their respective agencies’ efforts in related investigations.
This initiative in Hong Kong emerges in light of the recent JPEX incident, a case involving suspected fraudulent activities by a Dubai-based cryptocurrency exchange operating in Hong Kong without the necessary licensing.
This incident has resulted in approximately 2,305 victims, collectively losing HK$1.43 billion ($182.9 million), marking it as one of the most significant financial fraud cases in Hong Kong’s history.
Notably, on September 25, the SFC in Hong Kong announced a set of new measures aimed at enhancing transparency and security within the cryptocurrency realm. These measures encompass the publication of a comprehensive list comprising licensed, deemed-licensed, closing down, and pending-application VATPs.
These actions are being taken amid a surge in cryptocurrency activity in Hong Kong, with recent data from blockchain analytics provider Chainalysis indicating that the city has seen cryptocurrency inflows rivaling those of mainland China over the past year, despite having only 0.5% of mainland China’s population.
In 2021, mainland China initiated a comprehensive crackdown on cryptocurrency mining and trading activities within its borders. However, Hong Kong’s more accommodating stance may influence policymakers in mainland China to adopt a more lenient approach, according to Chainalysis.
