Hong Kong warns crypto corporations in opposition to referring to themselves as “banks”

• Hong Kong warns crypto corporations in opposition to utilizing the phrase “financial institution”
• The Hong Kong Financial Authority (HKMA) says solely licensed banks can take “deposits.”
• Utilizing phrases akin to digital financial institution, crypto financial institution and crypto asset financial institution contravenes the Banking Ordinance.

The Hong Kong Financial Authority (HKMA) has warned crypto corporations that it’s in opposition to the legislation for any unauthorised firm or platform to refer themselves as a “financial institution”, or deposit-taking companies. 

Hong Kong regulation prohibits this, HKMA famous.

Solely licenced banks can take deposits

HKMA’s warning famous that corporations taking such an method to their advertising and marketing to the general public are contravening the Banking Ordinance. The regulator notified the general public to concentrate on this truth, whereas crypto corporations have been reminded that solely HKMA-licensed suppliers can use the time period financial institution or take deposits from the general public.

“Underneath the Banking Ordinance, solely licensed banks, restricted licence banks and deposit-taking corporations (collectively referred to as “authorised establishments”), which have been granted a licence by the HKMA can perform banking or deposit-taking enterprise in Hong Kong,” the regulator warned by way of a press launch revealed on Friday.

Amongst phrases the Hong Kong monetary markets watchdog cautioned crypto corporations to not use or describe themselves embody digital financial institution, crypto financial institution, crypto asset financial institution, digital buying and selling financial institution and digital asset financial institution. Unlicenced corporations must also not declare to supply banking accounts or banking providers, in addition to describing funds despatched to accounts with the businesses as “deposits.”

Such phrases as “financial savings plans” or “low danger” and “excessive return” are additionally not allowed below the legislation for such unauthorised platforms. 

“These descriptions could mislead members of the general public into believing that these crypto corporations are banks authorised in Hong Kong, to which they will entrust their financial savings,” HKMA famous.

In keeping with the regulatory authority, crypto corporations are usually not accepted and controlled as banks in Hong Kong. HKMA doesn’t additionally supervise these platforms, which suggests funds that individuals place with these entities don’t profit from the Hong Kong Deposit Safety Scheme.

Exchanges warned in opposition to unlawful providers

Hong Kong is without doubt one of the fastest-growing crypto hubs on this planet and lots of crypto corporations, together with exchanges, have regarded to safe regulatory approval to supply services and products there. 

The Hong Kong authorities’s current unveiling of a crypto framework aimed toward reworking the crypto sector has been lauded by many crypto business gamers.

However whereas the jurisdiction opens up the monetary hub to crypto, Hong Kong’s Securities and Futures Fee (SFC) just lately warned exchanges and different suppliers in opposition to misrepresenting their regulatory standing. The regulator additionally requested exchanges to not provide providers and merchandise to buyers earlier than finishing the method, or extending providers not allowed below the legislation.