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Advisory issued on virtual commodities

March 14, 2014

The Financial Services & the Treasury Bureau has warned the public to exercise caution when trading in virtual commodities, such as the Bitcoin, as they may involve consumer, laundering and crime risks.

 

Such virtual commodities are not regarded as legal tender in Hong Kong, and their prices are susceptible to significant fluctuation due to speculation.

 

Unbacked by any physical items, issuers or the real economy, their value is very volatile, and can cause significant monetary losses to consumers, the bureau added.

 

The anonymous nature of virtual commodities also poses potential money laundering or terrorist financing risks. Consumers or businesses dealing in virtual commodities are prone to cyber-crime risks too.

 

About 20 complaints on investment scams, online deception, online blackmail and unauthorised access to computers in relation to the trading or storage of virtual commodities have been received by Police in the past 12 months.

 

Hong Kong does not regulate virtual commodities specifically in terms of their safety or soundness, but existing laws provide sanctions against money laundering, terrorist financing, fraud and cyber-crime.

 

The Government and financial regulators will closely monitor developments, including the use of virtual commodities in Hong Kong and the evolving regulatory consensus at international platforms, and also regulatory and enforcement actions in comparable jurisdictions, to consider further action in protecting the public.



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