Hong Kong’s Securities and Futures Commission (SFC) has raised concerns about the high annualized percentage yield (APY) offered by Floki’s staking program, prompting the project’s team to take immediate action.
Regulatory mitigation efforts underway
The team behind the meme-based cryptocurrency project, Floki, has announced its proactive steps to address concerns raised by the Securities and Futures Commission (SFC) in Hong Kong. Following the SFC’s placement of the token staking program on its list of suspicious investment products, Floki’s team issued a statement through a Medium post.
In their post, the Floki team acknowledged the SFC’s concerns and expressed their commitment to complying with regulatory standards, even in jurisdictions where specific frameworks for staking programs are lacking. The primary concern highlighted by the SFC appears to be the high APY offered by the Floki and TokenFi staking programs.
To mitigate concerns in Hong Kong and address the SFC’s regulatory issues, the Floki team has implemented several measures:
Warning Notices: The project has issued warning notices to inform potential investors about the associated risks, emphasizing the high APY as a key consideration.
Blocking Hong Kong Users: Floki has restricted access to its staking programs for users in Hong Kong, ensuring that residents in the region cannot participate in the program.
Pausing Offline Marketing: The team has temporarily halted its offline marketing campaign in Hong Kong, preventing further promotion of the staking program in the region.
Understanding staking programs
Staking in the context of cryptocurrencies involves locking a certain amount of digital assets on a blockchain network to support its operations and secure the network. In return for their participation, stakers receive rewards, often as additional tokens or coins. Staking has gained popularity in crypto due to its potential for generating passive income.
Floki’s approach to high APY
Floki’s team elaborated on the factors contributing to the high APY of their staking program. They mentioned a unique reward system incorporating $TOKEN from TokenFi, a market-responsive APY, a decentralized allocation strategy centered around the community, and the absence of fundraising from venture capitalists (VCs) or presales.
The SFC had previously warned investors in December 2022 about the high risks associated with virtual asset platforms offering deposit, savings, or staking services. In their advisory, the SFC emphasized the unregulated nature of such platforms and the potential for significant financial losses.
They cautioned investors that although some virtual asset arrangements are marketed as “deposits” or “savings” products, they do not enjoy the same regulatory protections as traditional bank deposits.
The SFC’s warning highlights the importance of investor protection and the need for caution when engaging with virtual asset platforms. As the cryptocurrency market continues to evolve, regulatory bodies worldwide are increasingly vigilant about ensuring the safety and security of investors.
Source: https://www.cryptopolitan.com/floki-announces-proactive-steps/