Explainer | Hong Kong intends to regulate crowdfunding. Here’s how it may affect you
- Authorities argue move needed to curb abuse after previous cases of fraud and support given to protesters of 2019 anti-government unrest
- But critics insist existing legislation is enough to manage risks, and new rules may threaten city’s status as financial hub
Hong Kong’s financial services authorities last month launched a three-month public consultation on a proposal to regulate crowdfunding activities in the city.
While the government argued the move was needed given such campaigns had been used to con people or back activities that threaten national security, critics feared the regulations would undermine the city’s status as an international financial hub.
Several groups had used crowdfunding to help pay the legal fees of protesters arrested during the 2019 anti-government unrest.
Here’s what you need to know about the proposed regulation and how it would affect Hong Kong and civil society.
1. How would crowdfunding be regulated?
According to the 25-page consultation document issued by the Financial Services and Treasury Bureau, anyone planning to launch a crowdfunding activity – be it online or offline to get donations from local individuals or entities – must apply to a new Crowdfunding Affairs Office. Applicants are required to submit, among other things, their personal data and contact details, information of the local bank account designated for crowdfunding purposes and the target beneficiaries, as well as to sign a statement pledging the drive will not involve any activities that will jeopardise national security.
Law enforcement agencies will be empowered to issue a prohibition order to discontinue any unapproved crowdfunding activity or those deemed unlawful, as well as impose a fine or prosecute organisers. People donating to an “unlawful crowdfunding activity” could also face prosecution, it added.