Hong Kong’s securities regulator has warned investors to beware of the risks associated with non-fungible tokens (NFTs). The regulator advised investors to consider investing in NFTs only if they fully understand the risks involved.
NFTs ‘the line between collectibles and financial assets’
A Hong Kong regulator has said that NFTs pose risks associated with other virtual assets and that investors should not invest in these assets if they do not fully understand such risks.
According to a report by Interface News, the Hong Kong Securities Regulatory Commission (HKSRC) said that some of these risks include lack of liquidity in the secondary market, volatile prices, lack of transparency in pricing of NFTs and the risk of hacking. ,
The regulator’s warning comes after HKSRC said it had observed that some NFTs have unique properties. Explaining this, the report states: “Some NFTs straddle the line between collectible and financial assets, such as subdivisions or securities with similar structures or, in particular, interests under ‘collective investment schemes’ NFTs.” mark it.”
The report states that any marketing or distribution of NFTs may be a “regulated activity” if the NFT is deemed to “constitute an interest under a collective investment scheme”. As per the regulator, any person carrying out any such regulated activity must be licensed.
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