The head of the Investor and Financial Education Council, Dora Li, said on Wednesday that people should think critically and do independent research before putting their money into virtual assets.

She was speaking after investors reported more than HK$1 billion in losses on cryptocurrency exchange JPEX. Eight people have so far been arrested on suspicion of fraud.

Li told an RTHK programme that people shouldn't blindly follow trends or be misled by so-called education and analysis that's been circulating on social media.

"Remember as the saying goes... there's no free lunch in this world. There's no such thing as high-return, low-risk investment, and virtual assets and related products are no exception," she said.

Li pointed out that a survey her council conducted in April showed a jump in people investing in virtual assets, from one percent in 2019 to six percent this year.

She noted that young people aged between 18 and 29 are particularly interested, with one in five saying they plan to invest in virtual assets because they were attracted by the short-term gains.

Speaking on the same programme, accounting sector lawmaker Edmund Wong said Hong Kong needs to strike a balance between regulation and market development in order to maintain its position as an international financial centre.

He said a blanket ban on virtual asset trading in the SAR could drive investors to offshore platforms, making it even more challenging for law enforcement agencies to pursue suspicious cases.