According to the Hong Kong Monetary Authority, cryptocurrency companies who pose as banks are breaking the region's Banking Ordinance. Such descriptions, according to the HKMA, "may mislead members of the public into believing that those crypto firms" are reliable financial institutions.
False descriptions are against banking regulations.
The Hong Kong Monetary Authority (HKMA) has warned cryptocurrency companies not to misrepresent themselves as banks or their products as "deposits." The Banking Ordinance of Hong Kong is being broken, according to the Hong Kong financial services authority, by crypto businesses engaging in this behavior.
The HKMA acknowledged that some cryptocurrency businesses present or identify themselves as crypto asset banks and digital banks in a statement released on September 15. The agency also issued a warning to cryptocurrency companies that offered to provide accounts or banking services. Such descriptions, according to the HKMA, "may mislead members of the public into believing that those crypto firms" are reliable financial institutions.
Cryptofirms Aren't Under the Control of HKMA
The regulator said that no cryptocurrency company should therefore attempt to attract customers by using language typically associated with banks. HKMA stated:
According to the Banking Ordinance, only licensed banks, banks with restricted licenses, and firms that accept deposits (collectively referred to as "authorized institutions") are permitted to conduct banking and deposit-taking operations in Hong Kong. These entities must hold a license from the HKMA.
The regulator stated that it is illegal for unlicensed organizations to use the word "bank" or to "make any representation that they are a bank or carrying on banking business in Hong Kong."
In the meanwhile, the HKMA cautioned locals in Hong Kong that because it does not regulate cryptocurrency enterprises, any "funds placed with them are not protected by the Hong Kong Deposit Protection Scheme." The authority stated that residents should check "the register of authorized institutions on the HKMA's website" if they are unsure about the legitimacy of a deposit-taking business.
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