Hong Kong Issues Warning to Crypto Firms: Avoid Misusing the Term “Bank”
The Hong Kong Monetary Authority (HKMA) has issued a warning to cryptocurrency firms, cautioning them against referring to themselves as “banks” or engaging in deposit-taking activities. The HKMA, which oversees banking regulations in Hong Kong, stated that only licensed banks are authorized to carry out such activities under the Banking Ordinance.
Only Licensed Banks Can Accept Deposits
The HKMA emphasized that any crypto firms marketing themselves as banks are in violation of the law. The regulator has urged the public to be aware of this, while reminding crypto firms that only providers licensed by the HKMA can use the term “bank” or accept deposits from the public. According to a press release issued by the HKMA on Friday, only licensed banks, restricted license banks, and deposit-taking companies, collectively known as “authorized institutions,” are permitted to conduct banking or deposit-taking business in Hong Kong.
The HKMA has specifically warned against the use of terms such as digital bank, crypto bank, crypto asset bank, digital trading bank, and digital asset bank by crypto firms. Unlicensed firms are also prohibited from claiming to offer banking accounts or banking services, as well as referring to funds received from customers as “deposits.”
Additionally, terms like “savings plans,” “low risk,” and “high return” are not allowed for unlicensed platforms, as they may mislead the public into believing that these crypto firms are authorized banks where they can entrust their savings. It is important to note that crypto firms in Hong Kong are not approved or regulated as banks, and the HKMA does not supervise these platforms. Therefore, funds deposited with these entities are not covered by the Hong Kong Deposit Protection Scheme.
Exchanges Warned Against Illegal Services
Hong Kong is a thriving hub for the cryptocurrency industry, and many crypto companies, including exchanges, have sought regulatory approval to operate in the region. While Hong Kong’s government has recently introduced a crypto framework to enhance the sector, the Securities and Futures Commission (SFC) of Hong Kong has warned exchanges and other providers against misrepresenting their regulatory status.
The SFC has also advised exchanges not to offer services or products to investors until the regulatory process is complete and not to engage in activities that are prohibited by law.
It is important for crypto firms operating in Hong Kong to adhere to these guidelines and avoid any misrepresentation to protect the interests of the public and maintain the integrity of the financial system.
Cryptocurrency regulations play a crucial role in creating a safe and legitimate environment for investors and businesses. Hong Kong’s warning to crypto firms about misusing the term “bank” highlights the importance of transparent and accurate communication in the industry. To stay updated on the latest news and developments in the cryptocurrency world, you can visit Uber Crypto News.