Hong Kong authorities have launched a new investigation into crypto-related activities within the city’s borders, according to a recent report. The report suggests that the investigation is mainly aimed at influencers tied to leading online exchange JPEX, who are said to have been promoting deceptive and unethical investing strategies. This move reflects authorities’ increased awareness of the need to remain vigilant with regards to investment schemes which target citizens of the area.
1. Hong Kong Crackdown on Crypto Influencers Tied to JPEX
Hong Kong’s Securities and Futures Commission (SFC) is cracking down on crypto influencers who fail to disclose their links to online trading platform JPEX, according to reports. It is the latest development in a wave of regulatory measures aimed at the country’s growing cryptocurrency industry.
The SFC is targeting online influencers who fail to reveal the extent corporate affiliations they have with JPEX. Reportedly, the agency issued multiple warnings via an email sent out to those who may have been inadvertently promoting piracy. According to the SFC, this practice is considered illegal under the country’s securities laws.
The clampdown on these activities serves as a reminder to crypto influencers of their legal obligations. They must ensure complete disclosure of any financial relationships with JPEX or any other firms “involving the conducing of regulated activities.”
To ensure compliance, the SFC has provided the following guidance:
- Keep records of any promotional materials used to advertise JPEX.
- Disclose financial benefits associated with any crypto-related activities conducted by JPEX or its affiliates.
- Abide by all relevant regulations pertaining to the promotion of crypto assets.
The SFC’s actions are a clear indication of its commitment to stamping out unlicensed crypto activities in Hong Kong. Strict adherence to these guidelines by crypto influencers is essential in protecting investors from fraud and other financial misconduct.
2. JPEX Warns of “Misleading Promotion”
The Japan Professional Exchange (JPEX) recently issued a statement warning citizens of the country from the practice of misleading promotion. JPEX is an organization that promotes the growth of Japanese economy and businesses nationwide.
Misleading promotion has serious consequences. It’s a form of fraud that is often practiced in business-related transactions. The statement warned that if someone was misled into buying something that was not advertised properly, that they could end up with a loss of their money.
The statement further warned of the dangers of believing in stories or ads that make false promises that are impossible to achieve. People have been known to waste a lot of money after being attracted to incentives and false statements about products or services.
JPEX further clarified that any transaction that involves a false or misleading information should be reported to them. The organization clarified that citizens must also be given the option to cancel their transaction if they are dissatisfied with the services or products offered.
3. Crypto Community Uneasy After Crackdown on Influencers
Crypto investors and users have felt a chill in the wake of a recent crackdown on social media influencers. On March 17th, the U.S. Securities and Exchange Commission (SEC) sent out demands for information from over a dozen well-known promoters of the cryptocurrency.
The SEC’s actions have made many within the crypto community uneasy, having a potentially huge impact on social media presence and marketing from these influencers.
The SEC said it is concerned that some of these influencers may not have been truthful when touting digital currency investments, and that their activities may have instigated violations against security regulations. The SEC is focusing in on influencers who accept “cash, virtual currencies, or other forms of payment to tout investments.”
As a result, the crypto-community has mixed reactions to the SEC’s decisions. Supporters of the SEC are relieved that more regulation is available to protect investors. Whereas, others are concerned that the SEC is overreaching its authority, with this crackdown considered to be an infringement on the freedom of expression. Thus, they fear it could impede the marketing of upcoming blockchain platforms.
- The SEC is focusing in on influencers who accept “cash, virtual currencies, or other forms of payment to tout investments.”
- The SEC’s actions have made many within the crypto community uneasy.
- The SEC’s decision has resulted in mixed reactions from the crypto-community.
- Supporters of the SEC feel more regulation is available to protect investors from fraudulent activities.
4. Hong Kong Authorities Tighten Crypto Regulations
Income Tax Collection Measures
The Hong Kong government has recently implemented a slew of measures to beef up tax collection from crypto traders. According to the Inland Revenue Department, individual cryptocurrency investors must report their gains and losses to the authorities. Those who fail to do so face hefty penalties.
In addition, the government will be collecting and tracking information on cryptocurrency transactions with stringent reporting requirements. The income tax authority will demand that companies and individuals report crypto-related taxable income, including trading profits, mining rewards, and income from ICOs. All of this must be reported to the tax collector at least six months after the end of every financial year.
Licensing Requirements
Under the new regulation, cryptocurrency exchanges and other crypto service providers must obtain an appropriate license from the authorities before they can operate legally. All license applications will be subject to scrutiny from the government before approval.
The licensing requirements are as follows:
- coin dealers must be appropriately licensed and register to operate in Hong Kong;
- exchanges must meet the set capitalization and liquidity thresholds;
- All cryptocurrency entities must adhere to stringent anti-money laundering (AML) and counter-terror financing (CTF) measures;
- They must protect customer funds, and any trading activity must be conducted on ascertainable terms; and
- All crypto-related services must comply with relevant consumer protection laws.
Regulatory Oversight
The government has also set up a new regulatory regime to monitor the cryptocurrency industry. All exchanges and service providers will be subject to regular rounds of audit. In addition, the Securities and Futures Commission (SFC) has set up a new licensing regime to protect consumers.
These new licenses, known as type 1 and type 7 licenses, will be handed out to crypto-asset companies providing services such as portfolio management, asset custodians, and exchanges. In addition, the SFC also requires exchanges to comply with their continuing obligations and submit periodic reports.
The move comes as part of the authorities’ attempt to further tighten the grip on cryptocurrencies and their associated influences in Hong Kong. As the situation develops, the impact of JPEX and other crypto influencers on the industry remains to be seen.