Rising Crypto Scams in Hong Kong: Implications for Investor Protection and Regulatory Action

Hong Kong, a global financial hub, has emerged as a battleground for cryptocurrency innovation and fraud. Between 2023 and 2025, the city has witnessed a staggering surge in crypto scams, with losses reaching HK$5.02 billion in the first eight months of 2025 alone according to data. High-profile cases, such as the JPEX collapse-HK$1.6 billion in fraud-and scams targeting elderly investors (e.g., HK$48 million lost to fake officials), underscore the urgency of addressing this crisis. At the intersection of regulatory vigilance, investor education, and market trust lies the Hong Kong Securities and Futures Commission's (SFC) ASPIRe roadmap, a strategic framework designed to balance innovation with investor protection. This analysis examines how these elements converge to shape Hong Kong's virtual asset (VA) ecosystem.

Regulatory Vigilance: The ASPIRe Roadmap and Enforcement Actions

The SFC's ASPIRe roadmap, unveiled in February 2025, represents a paradigm shift in Hong Kong's approach to crypto regulation. Comprising 12 initiatives, it prioritizes licensing regimes for over-the-counter (OTC) trading services, crypto custody providers, and virtual asset trading platforms (VATPs), while enhancing insurance and compensation frameworks to mitigate investor losses according to reports. For instance, the 2023 Anti-Money Laundering and Counter Terrorist Financing Ordinance (AMLO) mandates that crypto businesses operating in or targeting Hong Kong investors obtain SFC licenses. This aligns with international standards like the FATF's Travel Rule and has positioned Hong Kong as a crypto-ready jurisdiction.

Enforcement actions have also intensified. The JPEX scandal, which led to the arrest of 72 individuals and asset seizures of HK$228 million, exemplifies the SFC's collaboration with law enforcement. A joint task force, formed in 2025, has coordinated with the Hong Kong Police to tackle crypto fraud. These measures signal a proactive stance against unregulated platforms, as evidenced by the SFC's Alert List-a public database of suspicious VATPs and investment products according to the SFC.

Investor Education: Mitigating Misinformation and Building Awareness

While regulatory frameworks are critical, investor education remains the cornerstone of scam prevention. The SFC has intensified public awareness campaigns, recognizing that scams have tripled in three years and online investment fraud has surged by 170%. The ASPIRe roadmap explicitly emphasizes empowering investors through transparency and engagement. For example, the SFC has launched initiatives to regulate online financial influencers who promote crypto products according to reports, a move aimed at curbing misinformation.

Public education tools, such as the Alert List, serve as a first line of defense. By flagging unlicensed platforms like hashkey-related domains, the SFC equips investors to avoid fraudulent services. Additionally, case studies of scams-such as HK$21.8 million lost by an elderly man to a fake legal threat-highlight the need for targeted outreach to vulnerable demographics.

Market Trust and the Path to Innovation

In response to this crisis, Hong Kong has adopted a multifaceted strategy to restore and maintain trust in its virtual asset ecosystem. One crucial step has been the

launch of investor education programs, which provide tailored guidance to different demographic groups. These programs emphasize the importance of verifying the legitimacy of investment platforms and understanding the risks associated with virtual assets.

The SFC's licensing of VA spot ETFs and the development of sophisticated products like VA futures and options for institutional investors according to industry reports demonstrate this balance. However, trust is eroded by high-profile frauds. The JPEX case, for instance, not only caused financial losses but also exposed gaps in oversight.

The ASPIRe roadmap addresses these challenges by integrating safeguards such as custodial protections and AML/CFT compliance for VATPs according to the SFC. These measures aim to reassure investors that their assets are secure, thereby sustaining Hong Kong's appeal as a VA hub.

Conclusion: A Delicate Equilibrium

Hong Kong's response to crypto scams reflects a delicate equilibrium between fostering innovation and ensuring investor protection. The SFC's ASPIRe roadmap, coupled with robust enforcement and education initiatives, has begun to mitigate risks while promoting growth. However, the rise of sophisticated scams-such as deepfake frauds and pig butchering schemes-demands continuous adaptation. As the virtual asset sector evolves, Hong Kong's ability to maintain this balance will determine its standing as a trusted global financial center.