Hong Kong plans to regulate crowdfunding



On Monday, the Hong Kong government announced plans to secure official approval for all crowdfunding campaigns after cracking down on anti-democracy protests that use donations to pay for their legal defense.

Online crowdfunding has been popular among pro-democracy supporters in the city to pay for the legal and medical expenses of those arrested during the massive and often violent protests in 2019, as well as the living expenses of those who have fled abroad.

But most projects have closed or been forced to close as Beijing and local authorities tighten controls.

Permission for crowdfunding

The proposal, unveiled on Monday, would prevent activities that are “fraudulent, jeopardize the public interest, or endanger public and national security in the name of crowdfunding,” a government spokesman said.

All future crowdfunding activities, online or offline, must first be approved by the Crowdfunding Authority “regardless of their purpose or location.”

Under the proposal, “illegal” crowdfunding projects would be stopped by law enforcement and prosecuted.

Officials are also considering introducing a registration system for online crowdfunding platforms, even if they are not based in Hong Kong, but they did not elaborate on enforcement details.

The plans will go through three months of public consultation before they go to the legislature, which has been purged of opposition since the 2019 protests.

Financial Services and Treasury Minister Christopher Hui wrote on Saturday that Hong Kong lacks a regulatory system for crowdfunding and projects must be “transparent and accountable.”

The offer makes exceptions and special conditions for lottery sales, donation promotions, charitable promotions and crowdfunding events “widely recognized by the public.”

Great

Last month, the trustees and secretary of the now-defunct 612 Humanitarian Aid Fund, which raised funds to support protesters, were fined by a court for failing to properly register their group.

The foundation was disbanded last year after it was required by the National Security Police to turn over intelligence, including information about its donors and beneficiaries.

Among the foundation’s advocates was 90-year-old Cardinal Joseph Zen, one of Asia’s highest-ranking Catholic bishops.

Prosecutors have also used money laundering allegations in cases involving crowdfunding for democratic purposes.

In October, three Hong Kong activists said online payments company Stripe had abandoned its business after they used crowdfunding to pay legal bills resulting from a lawsuit against police.