Is Cardano going to be delisted from Hong Kong exchanges?


#1

While not mention by name it’s clear Cardano is one of the tokens they are talking about.

https://www.coindesk.com/hong-kong-orders-crypto-exchanges-delist-tokens-deemed-securities/


#2

It isn’t clear at all @CoconutTruffles, as the exchanges are not named, would you know which Hong Kong exchanges trade cardano? Because AFAIK cardano is traded on 2 Korean exchanges, coinnest and upbit. There are no Hong Kong exchanges listed on the Cardano website.

And even if Cardano is listed on a Hong Kong exchange, it’s an issue of the exchanges not having a license to trade securities. The SFC wants to be able to hold exchanges accountable if they commit fraud. Basically they want to protect investors from dodgy exchanges.

With a statement on Friday, the SFC revealed it had sent letters to seven unnamed cryptocurrency exchanges operating in or in connection with Hong Kong, warning them not to trade cryptocurrencies deemed as ‘securities’ under law, without a license.

Anyway, I’m reasonably sure that the mentioned exchanges will comply and get a license to trade “securities”, either that or they can not trade any cryptocurrency. Which is how things should be.

There is a coinscrum keynote video where Charles has predicted what is happening right now with regards to regulations and ICOs.


#3

Unless they consider Binance a Hong Kong exchange. Their HQ is located there, but their servers are in Japan and Korea…

But I am optimistic because based on what Clayton said during the last US hearing before the Senate, securities refers to coins that held shady ICO. I suppose it would be the same class-asset in Hong Kong. Even if Cardano also held an ICO in 2015-17, I am not sure (I hope) that ADA falls in the same category as the multiple ERC20 tokens which I believe are the target.


#4

They are not located in Hong Kong anymore AFAIK.

From Changpeng Zhao, our CEO:

In response to China’s decisions, we are moving our IP’s from Hong Kong to an offshore location. Now we have our IPs registered in BVI ( British Virgin Islands) and other locations. So we are registered in multiple locations and we have people in multiple locations. That way we will never be affected by one regulatory body.

source is from r/binance by one of the mods

Seeing as binance is down at the moment. Maybe they are facing some sort of backlash for this move and it’s the reason the site is down right now, it could also be because they are upgrading infrastructure to accommodate the huge influx of new users. Perhaps they are down because they are doing an infoSec audit because of the coincheck hack. Also read This article, this was published today. What are your thoughts on binance being down today?


Which is the better exchange platform?
Binance down again?
#5

Thanks for the update! I missed it

If they are transparent, based on this Official Binance tweet, that would be an upgrade for the reason you stated … Thanks for the link. You might be right about that backlash. Time will tell…


#6

Securities represent ownership of real assets such as gold, real estate, or shares of an enterprise. ADA is not a security. It is a currency used as a medium of exchange.


#7

Yes, I was talking about ICOs, not crypto (they will apparently do a distinction). SEC Chairman Clayton’s words, not mine (from 1:59 to 3:50)


#8

This is not entirely correct although he does mention the Howey Test.

Whether (and how) a token will be regulated in the United States depends in large part upon whether it is classified as a security (called an investment contract) under US securities law. This determination depends primarily on the test set out under SEC v. W.J. Howey Co., (the Howey Test) and subsequent case law.

The Howey Test holds that an arrangement is an investment contract (notwithstanding the fact that it is not a traditional equity or debt security) if four key elements are satisfied.

1.There is an investment of money; 2. in a common enterprise; 3. where the investor is led to expect profits; and 4. solely from the efforts of others.

In regards to the capital-raising entities that use distributed ledger or blockchain technology to facilitate capital raising and investment, the SEC recently analysed the applicability of both registration and exchange trading requirements in SEC Release No. 81270 (the DAO Report)

In analysing the tokens at issue in the DAO Report, the SEC focused primarily on the last prong of the Howey Test, i.e., whether investors in the DAO tokens had an “expectation of profit, solely from the efforts of others” before ultimately concluding that the DAO tokens were securities. Given the novelty of the technology, it seems reasonable to assume that many tokens will have ongoing involvement with their sponsors throughout their lifecycles.

Therefore, it is possible for the SEC to construe investment in tokens as speculative activity seeking capital appreciation from resale on a secondary market which would make them securities, as they did in the DAO Report.


#9

In the case of Cardano:

  1. The initial investors paid money for certificates redeemable in ADA.

  2. What is the common enterprise? CF? IOHK? Emurgo?

  3. & 4. The investors profited through speculation and appreciation of their initial investment.

ADA is not tied to any specific enterprise, anymore than ETH or BTC. Rather, it is the currency of the Cardano platform and community.

Here are links to guidance from relevant U.S. legal entities on crypto currencies:

IRS: https://www.irs.gov/newsroom/irs-virtual-currency-guidance

SEC: https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11

Nothing in either statement leads me to believe that ADA will be classified a security. :smiley:


#10

However, Clayton made a distinction between ICO tokens and major cryptocurrencies such as Bitcoin and Ethereum. He labelled ICO tokens securities, while classifying the others as "true cryptocurrencies,” promising smart and practical regulations for exchanges and investors dealing with these cryptocurrencies.

Clayton referred to true cryptocurrencies as public Blockchain networks with native cryptocurrencies either mined or produced by the public. If a certain company has control over the monetary supply of its crypto-asset distributed to its users and the value of the token is based on the performance of the company, Clayton reiterated that the token is a security and falls under the regulations imposed by the SEC.

Again, I’m not sure under which category we fall. I am hoping we are not listed as a security but time will tell. Thank you for replying @tknowny.


#11

I’m pretty sure Binance is in Hong Kong and it lists Cardano.


#12

Also we must ask … Is it expected that hk = China ?


#13

@Mw_cryptocurious

In response to China’s decisions, we are moving our IP’s from Hong Kong to an offshore location. So we are registered in multiple locations and we have people in multiple locations. That way we will never be affected by one regulatory body,” explained Zhao.

Source (from mid-january)


#14

I have not seen that. Thanks for the info.