Cryptocurrencies are alternatively known as virtual currencies. Unlike the traditional currencies, cryptocurrencies are neither issued by banks or governments, nor presented as physical banknotes or coins. Instead, it is a series of encrypted digits circulated in internet with value only when both buyers and sellers agree to use as a medium of exchange. With advantages of unrestricted global circulation in internet, coupled with high privacy illustrated by anonymous transaction, cryptocurrencies are widely adopted as “new currency” in recent years. A number of corporates accept cryptocurrencies for salary and transaction payment, fostering the establishment of exchange platforms, exchange shops and related investment products in markets.

Introduced in 2009, bitcoin is currently the most circulated cryptocurrency. The first-ever bitcoin transaction occurred in 2010, when a man paid 10,000 bitcoins for 2 pizzas, equivalent to an exchange rate of 1 bitcoin to 60 US cents. The bitcoin value has appreciated in an amazing pace over the past 10 years. At present, 1 bitcoin is worth over 30,000 US dollars, attracting many citizens to speculate.

Nevertheless, cryptocurrencies are not legal tender back by issuing banks or governments. Once transaction fails, the holder of cryptocurrencies is unprotected by law. In the past few years, there were cases of sudden closure of cryptocurrency trading platforms, leaving the holders with nothing but tears. Some money laundering and illegal fund-raising activities by taking advantage of unregulated nature of cryptocurrencies were also detected and aroused great concern in the market.

To prevent crime and protect the public, multinational governments are committed to regulate cryptocurrencies by issuing licenses to trading platforms, requesting financial institutions to regularly report financial sources and suspicious cases to regulators. The Hong Kong Monetary Authority, Securities and Futures Commission and the Hong Kong Police Force are the lawful institutions responsible for the cryptocurrency regulation and related crime fighting in Hong Kong respectively.

 

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