Hong Kong Cautions Investors Over Security Token Offerings

Law360 (March 29, 2019, 4:40 PM EDT) -- Hong Kong’s Securities and Futures Commission issued a warning on Thursday highlighting risks associated with security token offerings, cautioning against insufficient liquidity or volatility, opaque pricing, hacking and fraud that may be associated with virtual assets.

The SFC said in a statement that investors should be wary of security token offerings, which are similar to standard securities offerings but include digital representations of ownership of assets or economic rights utilizing blockchain technology. Blockchain uses encryption to record transactions in a decentralized, peer-to-peer format.

Security tokens are digital assets that are treated as securities from day one, unlike other cryptocurrencies, making them...

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