Hong Kong SFC ICO regulations: Is ICO token a security?

Is ICO token a security? While global regulators are concerned with the increased popularity of ICOs, Hong Kong SFC ICO regulations might fall under securities laws.

6 September, AtoZForex – The recent flow of startups that are getting capital from crowdfunding via the initial coin offerings (ICO) continues to attract the attention of the global financial regulators.

Hong Kong SFC ICO regulations

One of the latest watchdogs to turn its attention to the ICOs is the Hong Kong’s Securities and Futures Commission (SFC). The regulator has issued a public statement on existing regulations that can be applicable to the Blockchain token sales.

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The Hong Kong financial regulator states that it has noticed that particular ICOs have terms and features that might mean that tokens are ‘securities’. Therefore, the ICO tokens might be subject to the securities laws of Hong Kong.

While ICOs may fall under the definition of securities, the regulators warn potential dealers or advisers of such tokens. Any business in regards to the ICO tokens may constitute a regulated activity. Thus, parties engaging in a regulated activity targeting the Hong Kong residents need to have a license from the SFC. This is irrespective of the location of these parties.

Is ICO token a security?

The SFC’s Executive Director of Intermediaries, Julia Leung, has commented on the latest developments:

“We are concerned about an increase in the use of ICOs to raise funds in Hong Kong and elsewhere. Those involved in an ICO need to be aware that some ICO structures may be subject to Hong Kong securities laws.”

In addition, it is necessary to note that many regulators have been already eyeing the ICO token sales for a long time. Just like that, the key financial regulator of the Israel has signaled an interest in regards to the ICOs.

The head of the Israeli Securities Authority (ISA), Prof. Shmuel Hauser, has informed the public about the establishment of the committee for review of the necessity to regulate the ICOs.

Apparently, the committee’s function is to analyze and identify whether ICOs and cryptocurrency are subject to Israeli securities laws. The ISA ICOs Regulation Committee will be led by attorney Moti Yarnin and Dr. Gitit Gur-Gershgoren. Mr. Yarnin is the head of ISA Corporate Department, while Dr. Gitit Gur-Gershgoren is Chief Economist of ISA. Markets can expect the Committee to submit its initial recommendations by December 31st, 2017.

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