Hong Kong’s securities regulator is taking a skeptical tone on initial coin offerings (ICOs).

In a speech at an investment industry function on Friday, Julia Leung, deputy head of the Hong Kong Securities and Futures Commission (SFC), once more cautioned the public over fundraising activities associated with the technology.

“While we acknowledge that innovative technologies such as blockchain have the potential to improve efficiency and financial inclusion, that does not entitle anyone to conduct fundraising from the public in violation of securities law,” Leung said.

She further raised concerns that, while disguised as blockchain technology, many ICO projects may not be genuinely offering technological innovation and pose risks for investors.

Leung stated:

“Further complicating matters, many of these fundraising (activities) are dubious, if not downright frauds. The issuers escape the scrutiny of the police or securities regulators because of their cross-border nature and the way the crypto assets are structured to fall outside any regulator’s perimeter.”

The comments come just weeks after the agency halted an ICO project over concerns it was offering unregistered securities in Hong Kong. Previously, the SFC has ordered several exchanges to delist tokens derived from ICOs that were also regarded by the agency as securities.

As part of its efforts over the technology, the SFC is also moving to educate the public about the perceived risks of investments in cryptocurrencies.

In January, the SFC and another agency launched a media campaign across the city’s subway system in an effort to dampen the growing hype over ICO investments.

In Friday’s speech, Leung attributed the popularity of such investments to a gambling mindset, saying: “Many millennials who subscribe to digital tokens in ICOs understand that there is no intrinsic value in the tokens but are betting on the rapid rise of the token value in the secondary market.”

Leung image courtesy of the SFC