NFT
Hong Kong Regulator reminds investors of the risks associated with NFTs
Hong Kong’s securities regulator has warned investors about the risks associated with non-fungible tokens. Investors should only consider investing in NFTs if they are fully aware of the risks.
NFTs “Straddle the Line between Collectibles, Financial Assets ‘
A Hong Kong regulator stated that NFTs are subject to risks associated with virtual assets. Investors should avoid investing in these assets if the risk is not understood.
According to a report by Interface News, the Hong Kong Securities Regulatory Commission (HKSRC) said some of these risks include a lack of liquidity in the secondary market, volatile prices, a lack of transparency in the pricing of NFTs, and the risk of hacking.
The warning came after the HKSRC stated that it had noticed some NFTs possess unique characteristics. The report explained that some NFTs cross the line between financial assets and collectibles. It stated: “Some NFTs straddle both the line between financial assets and collectibles, such as subdivision of homogeneity with securities-like structures or, especially, interest under ‘collective investments schemes’ tokenized NFTs
The report stated that an NFT can be deemed to “constitute a interest under a collective investing scheme,” and any marketing or distribution may be considered a “regulated activity.” Any person engaging in any such regulated activity must have a license.
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Terence Zimwara
Terence Zimwara, a Zimbabwean journalist, author, and writer has been awarded the Zimbabwe Journalism Award. He has written extensively on the economic problems of certain African countries and how digital currencies can offer an escape route.
Image Credits: Shutterstock, Pixabay, Wiki Commons
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