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Hong Kong’s securities regulator has warned traders to be cautious of dangers which are related to non-fungible tokens (NFTs). The regulator additionally suggested traders to think about investing in NFTs provided that they absolutely perceive the dangers.
NFTs ‘Straddle the Line Between Collectibles and Monetary Property’
A Hong Kong regulator has mentioned NFTs face dangers which are related to different digital belongings and traders mustn’t spend money on 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) mentioned a few of these dangers embrace an absence of liquidity within the secondary market, unstable costs, an absence of transparency within the pricing of NFTs, and the chance of hacking.
The regulator’s warning comes after the HKSRC mentioned it had noticed that some NFTs have distinctive qualities. Explaining this, the report mentioned: “some NFTs straddle the road between collectibles and monetary belongings, similar to subdivision or homogeneity with constructions just like securities or, particularly, pursuits below ‘collective funding schemes’ tokenized NFTs.”
The report went on to state that if an NFT is deemed to “represent an curiosity below a collective funding scheme,” then any advertising 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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