Virtual Assets Report

FINDINGS AND OBSERVATIONS 25 24 In both Phases, more respondents expressed agreement (i.e., selected “Agree” or “Strongly Agree”) than disagreement (i.e., selected “Strongly disagree” or “Disagree”) with the statements, indicating the Hong Kong population’s positive perception of Hong Kong-licensed exchanges. However, the respondents’ perception may have changed, as indicated by the slight decrease of 0.3 – 2.3 percentage points for those in agreement with half the statements. In Phase 1, Hong Kong-licensed exchanges were perceived to be of higher quality than exchanges licensed in Singapore and the US, but the results in Phase 2 indicated slightly more disagreement with this sentiment. It is worth noting that “Neutral” accounted for about 40% – 60% of the responses. This indifference could be due to insufficient understanding or knowledge of the subject matter, which echoes the finding that close to 70% of the respondents did not understand virtual assets very well or at all. The year-on-year rise in investment fraud from 2022 to 2023 is alarming. The number of reported fraud cases more than tripled, to a total of 777 cases and a loss of HK$626.7 million as of August 2023.9 Following the case of JPEX, which involved HK$1.61 billion and more than 2,600 victims,10 more attention has been brought to virtual asset–related fraud. According to the responses in Phase 2, if Hong Kong investors suffer from scams when investing in virtual assets, whether on a Hong Kong-licensed or a non-Hong Kong-licensed platform, financial regulators, financial institutions that collaborate with this platform, law enforcement, companies that promote this platform and celebrities who have endorsed the platform are thought of as the five most accountable parties (see Figure 19). Financial regulators were ranked as the most accountable among these five, which reflects their significant role as the protectors of Hong Kong investors and highlights the importance of leveraging rigorous academic research in formulating regulations. Finally, we asked the respondents to share their views on the future of virtual assets in Hong Kong. Figure 20 shows word clouds that summarise the responses. Many of the respondents commented on the need for good regulations to help protect investors and more education to increase the public’s knowledge about virtual assets. 9. Anti-Deception Coordination Centre (2023, January). Scam statistics. https://www.adcc.gov.hk/en-hk/statistic.html 10. Shum, M., and Shi, S. (2023) ‘Two more crypto websites shut down’, The Standard, 23 December. https://www. thestandard.com.hk/section-news/section/4/258506/Two-more-crypto-websites-shut-down Figure 19. Accountable/Blamed Party If Hong Kong Investors Suffer from Scams When Investing in Virtual Assets: HK-Licensed vs. Non-HK-Licensed Platform Financial regulators HK-licensed platform Non-HK-licensed platform HK-licensed platform Non-HK-licensed platform HK-licensed platform Non-HK-licensed platform HK-licensed platform Non-HK-licensed platform HK-licensed platform Non-HK-licensed platform HK-licensed platform Non-HK-licensed platform HK-licensed platform Non-HK-licensed platform HK-licensed platform Non-HK-licensed platform HK-licensed platform Non-HK-licensed platform HK-licensed platform Non-HK-licensed platform Companies that allow this platform to advertise No one Platform employees Financial institutions that collaborate with this platform Celebrities who have endorsed the platform Companies that promote this platform Others Law enforcement The Legislative Council 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% Most Accountable 4th Accountable 2nd Most Accountable 5th Most Accountable 3rd Most Accountable