Hong Kong IFEC Warns Against Trading on Illegal and Foreign Platforms for Virtual Assets
Terrill Dicki Jul 03, 2023 03:50
The investor and Financial Education Council (IFEC), a public organisation under the Securities and Futures Commission (SFC), has issued a warning regarding the potential risks connected to unlicensed and foreign virtual asset trading platforms.
The investor and Financial Education Council (IFEC), a public organisation under the Securities and Futures Commission (SFC), has issued a warning regarding the potential risks connected to unlicensed and foreign virtual asset trading platforms. In reaction to the growing acceptance of virtual assets, which, despite their attraction, present a high-risk investing opportunity, this advise has been offered.
The SFC has yet to authorise any platforms that can provide services to retail investors after the new regulatory framework for virtual asset trading platforms goes into effect on 1 June 2023. Investors are advised to remain cautious of the inherent dangers by IFEC, which emphasises that the bulk of these platforms that are now accessible to the public are still unregulated by the SFC.
Investors may be exposed while trading on unregulated sites. Investors may not be protected from potential dangers by such platforms' lack of operational transparency and defined procedures. Many platforms, according to IFEC, have disclaimers that release them from liability even if they misplace investors' virtual assets.
The IFEC also clarified potential problems brought on by disagreements between investors and platforms. Investor complaints might have few options if there is no regulatory scrutiny. Furthermore, it's possible that the SFC won't be able to help. The IFEC stressed that instances of fraud, security lapses, theft, or an abrupt halt to operations could result in the complete loss of virtual assets held on these platforms.
Although they might be registered or licenced with foreign regulators, offshore platforms can carry hazards. Investor protection may be compromised by some governments' inadequate regulatory practises. Furthermore, because of their cross-border character, seeking out complaints or support abroad can be difficult. Investors may face an uphill struggle to make claims and seek legal redress if such platforms close or cease operations, the IFEC cautioned. Furthermore, local law enforcement and authorities might not be able to help if these sites have no relationship to Hong Kong.
The Hong Kong Special Administrative Region (HKSAR) needs more financial literacy, which the IFEC has long pushed for. It seeks to shield clients from the dangers of unregulated virtual asset trading platforms through this guidance, assisting them in making more knowledgeable and secure investment decisions.
Image source: Shutterstock