Tag: Hong Kong

Hong Kong broker and investment management firm Victory Securities plans to begin marketing crypto assets structured products by December. The firm will also offer unique products and services only to customers holding stablecoins in its omnibus account, enabling them to earn extra return on investment (ROI) over time.

First Broker in Hong Kong

According to the company’s release on Monday, Victory Securities has become the first broker to receive regulatory approval from the Hong Kong Securities and Finance Commission (SFC) to offer cash-settled digital asset-structured products to eligible professional investors.

Highlighting the benefits of the approval, Kennix Chan, executive director of Victory Securities, commented:

“At present, there is a lack of options for strategic investment products in the regulated virtual asset investment market. The regulatory green light for Victory Securities to market virtual asset structured products signifies an important step forward for Hong Kong to build a comprehensive virtual asset ecosystem.”

Following the SFC’s approval, the asset manager is working to introduce new products that will further solidify its position in the crypto brokerage industry before Q4 2024 ends.

Fresh Crypto-Structured Products

Victory Securities plans to update its VictoryX application to include more investment products. First, it will consist of new products that will track the price of specific cryptocurrencies, allowing investors to gain exposure to the crypto ecosystem while earning returns depending on different market conditions, either bullish or bearish.

As an asset manager, Victory Securities will handle any issues arising from market volatility and help investors reach specific investment goals, such as arbitrage.

Moreover, since Victory Securities’ clients can invest in money market funds using the VictoryX mobile app, the broker is introducing products allowing qualified hodlers to earn relatively stable returns.

“Victory Securities will continue to strive to introduce unique and innovative investment products to facilitate our clients in building their diversified investment portfolio and capturing profit opportunities under different market conditions,” Chan said.

Hong Kong’s Crypto Dawn

In a recent move to promote crypto adoption, the Hong Kong Financial Watchdog revealed plans to introduce stablecoin regulations before the end of the year.

Meanwhile, it followed the United States’ path in approving spot Bitcoin and Ether exchange-traded funds (ETF) earlier this year, increasing its position as an international focal point for financial investments.

Hong Kong is preparing to strengthen its position as a global crypto hub as its regulatory body, the Securities and Futures Commission (SFC), plans to implement a regulatory framework for stablecoins.

The regulations, expected to be released this year, are designed to strengthen oversight and provide clearer guidelines for the growing stablecoin market in the region. This shows the SFC’s commitment to securing digital asset stability and mitigating risks for investors.

A Transparent Framework

The framework will outline essential requirements for stablecoin issuers, such as reserve management, transparency, and operational safeguards.

Stablecoins, designed to maintain a stable value over time, have grown in popularity because they are more stable than more volatile crypto assets like BTC and ETH.

The Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) also issued a consultation paper in December 2023 on a proposal to regulate fiat-referenced stablecoin (FRS) issuers in light of the potential monetary and financial stability risks posed by FRS.

Circle Responds to Proposed Stablecoin Regulations

In line with the stablecoin regulation, Circle, a stablecoin issuer, submitted its response to the Hong Kong Financial Services, the Treasury Bureau, and the Hong Kong Monetary Authority (HKMA) on the proposed regulations for stablecoin issuers in Hong Kong.

Circle further noted that well-regulated stablecoins can drive the growth of Hong Kong’s Web3 ecosystem and strengthen its position as a global financial center.

Circle also agreed with the authorities that the FRS issuer must ensure that the FRS remains stable, which is critical for a trusted store of value.

Slower-Than-Expected Progress

Meanwhile, Hong Kong started crypto licensing in June 2023, which allowed licensed exchanges to offer retail trading services.

Progress has been slower than expected. Only three platforms have been fully licensed so far, while another 11 platforms are “deemed-to-be-licensed.”

The region’s regulator has concluded the initial round of onsite inspections and instructed these applicants to implement the required adjustments.

China’s Regulatory Commission has also introduced a new licensing system for crypto over-the-counter (OTC) and custody services and is seeking feedback from the industry.

Hong Kong Police have arrested 27 individuals as suspects linked to a $46 million crypto romance scam that affected victims across Asia, including Taiwan, Singapore, and India.

The detention of the 21 male and six female suspects, who were between the ages of 21 and 34, comes after the police raid on a Hung Hom industrial unit suspected to be the gang’s operational base. During the raid, the police seized 100 cell phones, nearly $26,000 in cash, and luxury watches.

The $46M Crypto Scam Model

The police have been investigating the scam since August and have made some discoveries. The fraud usually begins with a simple text message. The scammer, posing as an attractive woman, claims to have mistakenly added the wrong number. However, this innocent-sounding message was just the beginning of a rip-off.

The scammers would then build an online romance with their victim, fostering a sense of intimacy and trust. Using artificial intelligence (AI) generated deepfakes, they would share personal stories with their victims and, before long, start planning a future together.

Following months of emotional manipulation and relationship-building, the scammers exploit their victims’ trust, coaxing them into investing in a fraudulent crypto platform. Unwittingly, the victims surrender their assets, falling prey to the scammers’ deceit.

An Organized Gang

According to local police, the gang predominantly includes well-educated individuals with degrees in digital media and technology from local universities. The gang allegedly recruited these young professionals to leverage their expertise.

These young graduates collaborate with overseas IT specialists to develop a fake crypto platform, which was used to deceive victims into making investments.

Educated members helped the scam gang be well organized. They had departments dedicated to different stages of the scam and even used a training manual. This manual taught members how to exploit their victims’ emotions and convince them to invest in their fake crypto platform.

The $46 million crypto scam highlights the growing threat of cyber crimes. As law enforcement agencies work to track and prosecute offenders, investors should remain vigilant and take proactive measures to safeguard their assets.

Pig-Butchering Crypto Scams on the Rise

A study by University of Texas finance professor John Griffin and graduate student Kevin Mei uncovered $75 billion in crypto flows from victims to scammers in pig-butchering scams from January 2020 to February 2024.

The scammers, based mainly in Southeast Asia, use blockchain tracing tools to move funds to crypto platforms. $15 billion came from five exchanges, including Coinbase. These exchanges have cooperated with law enforcement in some cases but argue that tracing and freezing scam funds is challenging.

The Hong Kong Securities and Futures Commission (SFC) is swiftly expanding the city’s crypto industry by issuing more licenses to crypto exchanges in batches by the end of the year, according to a local media report.

The SFC’s decision to issue more licenses to crypto exchanges comes as the regulatory body celebrates its 35th anniversary this year.

The SFC also noted its strategic priorities for 2024 to 2026, focusing on strengthening market resilience, boosting Hong Kong’s capital market’s global competitiveness and appeal, driving the financial market’s transformation through technology, and improving institutional resilience and operational efficiency.

HKVAX Secures Crypto Exchange License in Hong Kong

According to the report, Liang Fengyi, CEO of the China Securities Regulatory Commission, announced that the regulator had issued a license to Hong Kong Virtual Asset Exchange (HKVAX) to function as a crypto exchange in the region, following previous approvals for OSL and HashKey exchange.

Upon securing the license, HKVAX noted in a statement last Thursday that the company focuses on security token offerings, tokenizing real-world assets, and providing over-the-counter trading, exchange, and custody services.

11 Platforms Seeking Licences

According to Fengyi, 11 platforms are on the SFC’s list of virtual asset trading platform applicants seeking licenses. The regulator has concluded the initial round of onsite inspections and instructed these applicants to implement the required adjustments.

The SFC chief noted that the agency aims to maintain market fairness and promote the development of the regulatory system for virtual asset trading platforms.

Fengyi further stated that the China Securities Regulatory Commission has introduced a new licensing system for crypto over-the-counter (OTC) and custody services and is seeking feedback from the industry.

He also noted that to drive the transformation of the financial market, it is necessary to embrace financial innovation, advance the regulatory framework for virtual asset trading platforms, encourage the tokenization of traditional assets, and leverage regional blockchain and Web3 technologies to foster secure and responsible financial technology.

Consequently, Hong Kong seeks to attract top players in the crypto space by offering a favorable environment, complete with clear compliance measures and investor protections.