Hong Kong's distance from western financial centres has given the city just the sort of freewheeling mentality that bitcoin's libertarian enthusiasts embrace. Attempts to curb speculation using conduct-based regulation are unlikely to dim crypto-mania.

Still, regulators are right to step forward and try. On Friday, the territory's Securities and Futures Commission announced that it had asked exchanges and issuers of initial coin offerings to cease unlicensed trading of crypto "securities".

Regulators have a duty to protect investors. Trades on exchanges are guaranteed to have legal standing. Stock investors know that brokers hold cash and securities in segregated accounts.

Hong Kong's distance from western financial centres has given the city just the sort of freewheeling mentality that bitcoin's libertarian enthusiasts embrace. KIN CHEUNG

They are protected by the broker's capital and brokerage account insurance. Cryptocurrency investors have no such assurances. Trading on a crypto exchange is akin to trusting someone who claims to be a bookie.

Investors in bitcoin and other cryptocurrencies have recently lost millions due to hacks that exploit this systemic weakness. The SFC has "noticed" that certain Hong Kong-linked cryptocurrency exchanges rank highly by global trading volume.