After adding the token staking programme to its list of dubious investment products, the Securities and Futures Commission (SFC) in Hong Kong expressed concerns, the team behind the meme-based cryptocurrency project Floki stated it is taking action to allay those concerns.
“We’ve taken steps to mitigate concerns in jurisdictions where the regulatory framework does not specifically cover or cater for the staking programmes,” the group wrote on Medium. “As indicated by the statement of the SFC, it appears that the high APY of the Floki and TokenFi staking programmes is their key concern.”
The Floki team said that in response to regulatory concerns in Hong Kong, they have taken steps including warning notices, preventing users from Hong Kong from participating in their staking programmes, and halting their offline marketing campaign in the area. They also made sure that no users from Hong Kong have signed up for the programme thus far. Staking is the practice of locking cryptocurrency in a blockchain network and receiving benefits in exchange.
The group provided an explanation in a Medium post regarding how the high annualised percentage yield (APY) of Floki’s staking programme is maintained. It includes a market-responsive APY, a decentralised and community-centric allocation strategy, a special reward system that uses $TOKEN from its successful sister project TokenFi, and no fund-raising from VCs or presales.
The SFC cautioned investors in a post from December 2022 about the high risks and uncontrolled nature of virtual asset platforms that provide deposit, savings, and staking services. The advisory stressed the possibility of substantial losses.
“Although some [Virtual Assets] Arrangements are frequently advertised or labelled as “savings” or “deposits,” they are not the same as bank deposits and are not subject to regulation. The SFC stated in the article that investors are not protected in any way.