Hong Kong’s SFC calls for regulation on NFT-based investment schemes

Hong Kong’s Securities and Futures Commission has said that some NFTs that constitute investment products will have to be regulated.   

According to South China Morning Post, the SFC also warned investors of the risks involved with investing in such tokens.

Some NFTs are fractionalised on structured in a way similar to securities or interests in a ‘collective investment scheme’. Those that provide those tokens in Hong Kong or are targeting Hong Kong investors must obtain a licence from the SFC and certain authorisation requirements could also be triggered.

The SFC said, “As with other virtual assets, NFTs are exposed to heightened risks including illiquid secondary markets, volatility, opaque pricing, hacking and fraud. Investors should be mindful of these risks, and if they cannot fully understand them and bear the potential losses, they should not invest in NFTs.”

Back in May this year, social networking giant Instagram revealed it was set to trial the use of NFTs on its platform for some US users.

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