Hong Kong Securities and Futures Commission (SFC) said on Friday it would crackdown on cryptocurrency exchanges that operate in the Asian financial hub without a license or violate local securities laws, Reuters reported.
The SFC sent warning letters to seven cryptocurrency exchanges in Hong Kong or with connections to the city that they should not trade cryptocurrencies without a licence.
Most of these exchanges either confirmed that they did not provide trading services for cryptocurrencies or “took immediate rectification measures” including removing relevant cryptocurrencies from their platforms, the regulator said.
“We will continue to police the market and enforce when necessary,” said the SFC’s Chief Executive Officer Ashley Alder.
"But we are also urging market professionals to do proper gatekeeping to prevent frauds or dubious fundraising and to assist us in ensuring compliance with the law,” he added.
The warning comes after the investor complaints they were unable to withdraw cryptocurrencies from their accounts with some exchanges, and that they had suffered significant losses due to “technical breakdowns” of the platforms.
"If investors cannot fully understand the risks of cryptocurrencies and ICOs or they are not prepared for a significant loss, they should not invest," said Ms Julia Leung, the SFC's Executive Director of Intermediaries.
"Investors who store their fiat currencies and cryptocurrencies with unregulated cryptocurrency exchanges should be aware of the risks of hacking and misappropriation of assets."
Investors are also urged to be wary of the increased risk of extreme price volatility, hacking and fraud when investing in cryptocurrencies and ICOs, and using services of cryptocurrency exchanges.