Hong Kong’s securities regulator has warned buyers to be cautious of dangers which are related to non-fungible tokens (NFTs). The regulator additionally suggested buyers to contemplate investing in NFTs provided that they absolutely perceive the dangers.
NFTs ‘Straddle the Line Between Collectibles and Monetary Property’
A Hong Kong regulator has stated NFTs face dangers which are related to different digital belongings and buyers mustn’t put money into these belongings if they don’t absolutely perceive such dangers.
In keeping with a report by Interface Information, the Hong Kong Securities Regulatory Fee (HKSRC) stated a few of these dangers embrace a scarcity of liquidity within the secondary market, unstable costs, a scarcity of transparency within the pricing of NFTs, and the chance of hacking.
The regulator’s warning comes after the HKSRC stated it had noticed that some NFTs have distinctive qualities. Explaining this, the report stated: “some NFTs straddle the road between collectibles and monetary belongings, similar to subdivision or homogeneity with constructions just like securities or, particularly, pursuits beneath ‘collective funding schemes’ tokenized NFTs.”
The report went on to state that if an NFT is deemed to “represent an curiosity beneath a collective funding scheme,” then any advertising and marketing or distribution of such might represent a “regulated exercise.” In keeping with the regulator, any individual finishing up any such regulated exercise should be licensed.
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