The Financial Services and the Treasury Bureau published on Monday a consultation paper on the proposal to enhance regulation of crowdfunding activities, and launched a three-month public consultation exercise.

Online crowdfunding was popular among the city's democracy supporters to pay legal and medical costs for those arrested during huge and often violent protests in 2019, and the living expenses of those who have fled abroad.

But most projects have closed down, or have been forcibly shuttered, as Beijing and local authorities tighten their grip.

The proposal unveiled Monday will prevent activities that are "fraudulent, jeopardising public interest, or endangering public and national security in the name of crowdfunding", a government spokesperson said.

All future crowdfunding activities, online or offline, must be approved first by a Crowdfunding Activities Office "regardless of their purpose or location".

"Illegal" crowdfunding projects will be halted by law enforcement and subject to prosecution, according to the proposal.

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

Secretary for Financial Services and the Treasury Christopher Hui wrote on Saturday that Hong Kong lacked a regulatory system for crowdfunding and projects must be "transparent and accountable".

The proposal makes exceptions and special accommodations for lottery sales, physical donation events, charity events and crowdfunding events "widely recognised by the society".