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The Securities and Futures Commission (SFC) of Hong Kong has recently issued a stark warning concerning the operation of the cryptocurrency exchange MEXC, which has been found to be non-compliant with the local regulations governing cryptocurrencies. This revelation places MEXC in a precarious position, as it is operating without a proper license in Hong Kong.
Unlicensed Operations Exposed
In a press release published last Friday, the SFC detailed its findings regarding MEXC’s activities within the region. According to the regulator, MEXC has not shied away from promoting its services to Hong Kong’s investors, despite not having secured a license from the SFC or even initiating the application process for one. Such actions are in direct violation of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, making unlicensed operation of a virtual asset service provider a criminal offense in Hong Kong.
SFC Adds MEXC to Alert List
Reacting to these violations, the SFC has taken the step of including both MEXC and its website on the Suspicious Virtual Asset Trading Platforms Alert List. The inclusion is a clear indication of the regulator’s intention to clamp down on unlicensed activities within the crypto space, aiming to protect investors from potential risks.
The SFC’s cautionary note highlights the dangers of engaging in virtual asset transactions on platforms that lack proper regulation. It stressed that investors face the risk of losing their entire investment on these platforms due to various factors, including operational failure, hacking, or asset misappropriation.
Repeated Regulatory Challenges
MEXC’s regulatory troubles are not confined to Hong Kong. In the past, the exchange has encountered similar issues in other jurisdictions. Notably, Japan’s Financial Services Agency flagged the exchange for operating without proper registration last April. Furthermore, Germany’s Federal Financial Supervisory Authority also issued a warning against MEXC for unauthorized operations in October.
This latest alert from the SFC follows another warning issued earlier in the week concerning the crypto exchange Bybit, further underscoring the regulator’s commitment to enforcing compliance within the industry.
Hong Kong’s Regulatory Framework
Hong Kong has been actively pursuing the establishment of a comprehensive regulatory framework for the cryptocurrency sector. The SFC’s initiatives include consultations on sector-specific regulatory rules and the introduction of a Virtual Asset Service Providers licensing regime in March. The deadline for crypto license applications recently closed, with 24 applicants, indicating a significant interest in compliance from various platforms.
Among the applicants were major exchanges with connections to mainland China or Hong Kong, signifying the importance of the Hong Kong market to the global cryptocurrency industry. With the licensing process underway, the SFC aims to foster a safe and regulated environment for both retail and institutional crypto investors in Hong Kong.
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