The recent JPEX scandal has left a mark on Hong Kong’s cryptocurrency industry, raising concerns about the future of web3 and digital assets in the region. Nonetheless, a recent speech by Christopher Hui, Hong Kong’s Financial Services and Treasury Secretary at the ongoing Hong Kong Fintech Week, has provided reassurance. Hui confidently declared that the JPEX scandal, amounting to $165 million in losses, would not hinder Hong Kong’s web3 plans.

The Secretary emphasized the government’s commitment to implementing regulatory measures to govern the crypto industry in light of the scandal. During his speech on November 1, Hui stated, “We’ve been asked many times whether JPEX will affect our determination to grow the Web3 market—the answer is a clear no.”

The JPEX fraud scandal impacted over 2,500 Hong Kong citizens, leading to the involvement of the Hong Kong Police Force and the Securities and Futures Commission (SFC).

The SFC revealed last month that JPEX had been promoting its services in Hong Kong without obtaining the necessary license. In a warning issued on September 13, the SFC highlighted the illegal nature of JPEX’s products, which involved deposits, savings, and earnings of virtual assets.

Investors were urged to exercise caution when encountering seemingly lucrative investment opportunities. Following the SFC’s warning, JPEX increased withdrawal fees on its platform to 999 USDT, citing liquidity provider issues.

The scandal further escalated, resulting in the arrest of influential businessmen associated with JPEX by the Hong Kong Police.

Contrary to expectations, the Hong Kong government intends to tighten regulations on the crypto industry in response to the JPEX incident. The aim is to prevent the recurrence of such unfortunate events.

Hui revealed ongoing efforts on the regulatory front. Hong Kong’s Chief Executive, John Lee Ka-Chiu, announced on September 19 that measures would be taken to protect investors, including raising awareness about investing exclusively on SFC-registered platforms.

To address illicit activities on crypto exchanges, the SFC established a joint task force with the Hong Kong Police. On October 4, the SFC announced that the newly formed group would monitor and investigate illegal activities related to virtual asset trading platforms.

Collaboratively, they will conduct investigations, assess risks associated with suspicious platforms, and share vital information to facilitate enforcement actions.

The SFC has also released a list of licensed virtual asset trading platforms, including pending applications. The list includes platforms facing compliance issues and suspicious trading platforms that are in the process of closing down.

As part of Hong Kong’s Web3 regulatory plans, the SFC will issue guidelines on tokenized securities and oversee the tokenization of investment products, as authorized by the Financial Secretary.

Despite the JPEX scandal, Hong Kong remains unwavering in its commitment to the development of web3 and the responsible growth of the crypto industry. The government’s proactive steps to tighten regulations and protect investors demonstrate its determination to foster a secure and thriving digital asset ecosystem in the region.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.