Hong Kong's securities regulator has warned investors to be wary of the risks associated with irreplaceable assets (NFT). The agency also advises investors to consider investing in NFT only when they truly fully understand the risks that may be encountered.
As reported by Interface News, the Hong Kong Securities Regulatory Commission (HKSRC) said some of these risks include a lack of liquidity in the secondary market, fluctuating prices, a lack of transparency in NFT pricing, and the risk of hacking.
The regulator's warning comes after the HKSRC said it had observed some NFT's unusual activity. Explaining this, the report said: "Some NFT divides the boundaries between collectible assets and financial assets, such as splitting or identifying with structures similar to securities, the benefits under the NFT investment plan are encrypted."
The report goes on to state that if an NFT is deemed to "constitute benefits under a collective investment plan," any such marketing or distribution activity can constitute a "rule-of-law operation." According to the regulator, any person who performs any such activity must be licensed.
