Hong Kong Urged to Review Regulatory Mechanisms Amid Trust Fraud Concerns

According to Odaily, a recent $500 million fraud case involving a trust institution has raised questions about Hong Kong's regulatory framework. Wu Jiezhuang, Chairman of the Legislative Council's Subcommittee on Web3 and Virtual Asset Development, emphasized that while Hong Kong is actively attracting foreign investment, including from mainland China, there is a significant misunderstanding of its systems among outsiders. This issue needs to be addressed promptly. Wu noted that the incident is likely to draw international attention, necessitating a swift review of the relevant regulatory mechanisms to address public concerns. Currently, Hong Kong lacks a dedicated asset custody regulatory system, and some Web3 companies use trust companies as third-party asset custodians. While following proper procedures poses no issues, exploitation of regulatory gaps by criminals could undermine confidence in Hong Kong as a financial hub. He suggested increasing efforts in public education and reviewing the system for potential improvements to prevent similar incidents in the future.