Hong Kong’s Securities and Futures Commission (SFC) has directed seven domestic cryptocurrency exchanges not to trade cryptocurrencies or tokens that fall under the definition of “securities".

The regulator last year issued a statement on initial coin offerings (ICOs). Since then, it said that it has taken regulatory action against a number of cryptocurrency exchanges and issuers of ICOs.

“The SFC has sent letters to seven cryptocurrency exchanges in Hong Kong or with connections to Hong Kong (Note 2) warning them that they should not trade cryptocurrencies which are "securities" as defined in the Securities and Futures Ordinance (SFO) without a licence,” the SFC said.

In its official release, the SFC stated that most of the exchanges have either confirmed that they do not provide trading services for such cryptocurrencies or have removed such cryptocurrencies from their platforms.

In addition, the regulator also sent letters to seven ICO issuers, who, in turn, have confirmed their compliance with the SFC’s regulatory regime or immediately ceased to offer tokens to Hong Kong investors.

"We will continue to police the market and enforce when necessary," said Ashley Alder, the SFC's Chief Executive Officer. "But we are also urging market professionals to do proper gatekeeping to prevent frauds or dubious fundraising and to assist us in ensuring compliance with the law."