Hong Kong has not completely deregulated the cryptocurrency industry since embracing it in the middle of last year. The steps that governments will take regarding regulations are therefore of critical importance. In particular, some high-risk assets like meme coins create stories that can deceive investors and have the potential to inadvertently go to zero in the long term.
Floki and Hong Kong
The Hong Kong Securities and Futures Commission (SFC) recently warned the public about Floki and TokenFi. The institution announced that staking programs are risky, thereby targeting one of the popular meme coins. According to the SFC, these products offer staking services and claim to provide annual returns ranging from 30% to 100%. However, they do not have the necessary permission for sale in the region.
Indeed, APYs over 30% would make anyone suspicious. At one time, even the UST stablecoin was nearly providing double-digit percentage returns, and large crowds were interested in it. Now, it does not seem unreasonable for the SFC to recommend a suspicious approach to 30-100% APY.
Altcoins Providing Services Without Permission
The regulatory body hinted that the management of these two products could not convincingly show the Hong Kong SFC how they planned to achieve the stated high annual returns. However, the Floki team mentioned that they would strive to resolve this.
The crypto platform emphasized that the SFC’s only complaint was the high performance of the staking programs. Even here, the response given actually shows how justified the SFC is, which is far from serious.
Especially with the launch of their TokenFi project, which they claimed would be a game-changer in the RWA field, Floki drew suspicions upon itself. On one side, there are RWA blockchains developed by large technical teams collaborating with giants like Swift, and on the other side, a meme coin’s RWA solution that doesn’t go beyond claims?
Since Floki’s attitude was not seen as well-intentioned, and the response to the SFC warning lacked seriousness, investors may need to be cautious in the medium and long term. There have been too many altcoins in the crypto markets that rapidly went to zero, and all are candidates for this fate.
