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Hong Kong authority may look to supervise digital currency, says expert

Out-Law News | 03 Aug 2016 | 1:14 pm | 1 min. read

The Hong Kong Monetary Authority (HKMA) may have to consider supervision of digital currencies following a security breach at Hong Kong-based virtual currency exchange Bitfinex, an expert has said.

Bitfinex has halted all trading on its platform in response to a security breach that has seen around $72 million worth of bitcoins stolen from users.

All digital token deposits and withdrawals have also been halted, Bitfinex said.

Bitcoin is a digital currency underpinned by blockchain, a distributed ledger technology

Hong Kong-based technology law expert Paul Haswell of Pinsent Masons, the law firm behind Out-Law.com said: "The HKMA may need to focus on the digital currency market as more banks and other financial institutions look to invest in bitcoins."

"In a market like Hong Kong, where there is a growing appetite for bitcoins, but little to no education as to the risks associated with them, it may be time for regulation. While the HKMA has published cybersecurity guidelines and warned about the risks associated with virtual currencies, it currently has no control over virtual currency exchanges like Bitfinex," Haswell said.

Zane Tackett, director of community for Bitfinex said on Reddit that 119,756 bitcoins had been stolen from users' accounts.  

"We are undertaking a review to determine which users have been affected by the breach. While we conduct this initial investigation and secure our environment, bitfinex.com will be taken down," Bitfinex said.

"The theft is being reported to — and we are co-operating with — law enforcement," it said.

The exchange is "still evaluating the various options for addressing customer losses. At this time we don't have any details that we can share on this, nor have we made any decisions regarding this", Tackett said.

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