Floki commits to compliance in response to the Hong Kong Securities and Futures Commission's scrutiny of high annual return projects
Floki believes that regulatory engagement is not adversarial in spirit and practice, but rather collaborative.Author: Floki
Floki noticed that the Hong Kong Securities and Futures Commission (SFC) included it on a list marked as "suspicious" on January 26, 2024, due to the high annual percentage yield (APY) of the Floki and TokenFi projects.
Such situations arise from misunderstandings regarding how Floki calculates its staking APY and how it can sustain high returns. Floki is committed to maintaining compliance and values its relationship with regulators.
To meet regulatory expectations, Floki outlined several steps taken and explained how its high APY operates.
Floki published a disclaimer on its website, informing Hong Kong citizens that they cannot participate in the staking program until the issues with regulators are resolved. Technical measures were also taken to block access to the staking service from Hong Kong IP addresses. Additionally, offline promotional activities in the jurisdiction were suspended in mid-December 2023.
What Drives the High APY?
The primary concern of the Hong Kong SFC is the extremely high annual percentage yield (APY) offered by the Floki and TokenFi staking programs.
Floki's operational model has a unique premise; unlike traditional models that increase supply or provide marginal rewards from a limited token pool, it rewards participants with $TOKEN, the native token of its promising tokenization project, TokenFi.
TokenFi is not just a platform but a pioneering project in the burgeoning tokenization industry, which is expected to grow to an astonishing $16 trillion by 2030. Larry Fink, CEO of the world's largest asset management company BlackRock, has stated that tokenization is the future of the market and believes it will be larger than Bitcoin ETFs.
The APY of the Floki staking program is so high because a significant portion of the TokenFi supply is allocated to Floki stakers. While Floki could raise tens of millions of dollars from venture capital and presales, they chose not to do so. Instead, they allocated most of the TokenFi supply to Floki stakers. This ensures that the APY remains high and that the project's true supporters receive the majority of the tokens, rather than just venture capitalists or early buyers.
Sustainability and Decentralization
High returns naturally raise sustainability concerns. While the APY is indeed influenced by market conditions and the potential demand for $TOKEN, it is designed with self-adjusting properties.
Rewards are determined based on market capitalization, and for TokenFi, since its inception, the market has significantly appreciated its value due to the perception of it as a high-potential project.
The staking system of Floki and TokenFi operates autonomously on the blockchain, meaning that even if team members do not participate, users can still maintain control, and the system will continue to operate. The same rules apply to everyone, demonstrating a strong commitment to fairness and decentralization.
It is important to understand that the value of $TOKEN comes from the extent of TokenFi's growth and the level of trust people have in it. Therefore, the APY will fluctuate with the market value of the token. In short, the staking rewards reflect the community's enthusiasm for TokenFi rather than unstable practices regarding the token. The high APY to date is due to many people purchasing TokenFi because they believe in its long-term potential in the projected $16 trillion tokenization industry.
Embracing Regulation
Despite facing regulatory challenges, the Floki team emphasizes its commitment to working with authorities to alleviate concerns.
Floki believes that regulatory engagement is not adversarial in spirit and practice but collaborative. The approach is to strike a balance between responsible, regulated participation in the innovative financial products and digital assets space.
About TokenFi
TokenFi is Floki's sister token and an integrated tokenization platform that enables users to easily issue tokens or tokenize real-world assets (RWA). TokenFi aims to revolutionize the trillion-dollar tokenization industry by providing a user-friendly interface that does not require coding expertise.
