Hong Kong's Securities and Futures Commission (SFC) wants stakeholders to know that they see security token offers (STOs) as securities. On March 28, 2019, SFC issued a press release, revealing the risks of regulators and related STOs.
STOs held as securities
In a press release, the SFC stated that the likelihood that the STOs would be considered as securities is high, and therefore, these markers will be included in the Hong Kong's Securities and Futures Regulation (SFO) regulatory area.
Security tokens are usually commodities, such as gold, which are the main assets such as shares, or property given through the block chain. These traded securities are a growing market in the area of emerging digital assets.
The Hong Kong financial regulator also announced that the unlicensed trading of STOs was a crime. Here's a quote from the press release:
(Where Security Markers are veya securities (, any person who markets and distributes the Security Markers (whether or not targeting Hong Kong or Hong Kong investors) must license or register a Type 1 arrangement unless a valid exemption applies. under dealing with assets. "
SFC also called on STO brokers to obey the Commission's strict rules. In addition, the Commission reminded the STO brokers of the task of providing investors with the necessary information about these virtual assets.
Pay attention to risks
Hong Kong SFC also reminded investors of risks related to tokenize securities trading and digital assets in general. The Commission outlined the issues related to liquidity, volatility and fraud cases to mention a few.
Currently, the crypto-currency landscape is related to revelations made from multiple sources where 90 percent of the volume of bitcoin (BTC) trading is counterfeit. Given the nature of the STOs still emerging in the crypto-currency markets, SFC said investors should comply with appropriate due diligence controls in order to avoid large losses.
STO Regulation in Asia
As previously reported by BTCManager in February 2018, SFC instructed to remove exchanges from their platform. At that time, the Commission sent a warning letter to the seven exchanges to remove certain ICO tokens that SFC considers as a guarantee from the trading catalog.
Whether ICO markers are securities or not is a major issue in the industry. Many ICO project argue that markers are public services, while regulators such as the United States Securities and Exchange Commission (SEC) continue to argue.
In other parts of Asia, Thailand's Securities and Exchange Commission says it has put in place methods to develop a regulatory framework for STOs. The plan is part of comprehensive cryptographic money laws covering the country's first money offers (ICOs), virtual currency brokers and clearing platforms.