- Hong Kong warns crypto companies in opposition to utilizing the phrase “financial institution”
- The Hong Kong Financial Authority (HKMA) says solely licensed banks can take “deposits.”
- Utilizing phrases comparable 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 companies 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 companies taking such an strategy to their advertising to the general public are contravening the Banking Ordinance. The regulator notified the general public to pay attention to this reality, whereas crypto companies had been reminded that solely HKMA-licensed suppliers can use the time period financial institution or take deposits from the general public.
“Beneath the Banking Ordinance, solely licensed banks, restricted licence banks and deposit-taking corporations (collectively generally known 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 printed on Friday.
Amongst phrases the Hong Kong monetary markets watchdog cautioned crypto companies to not use or describe themselves embrace digital financial institution, crypto financial institution, crypto asset financial institution, digital buying and selling financial institution and digital asset financial institution. Unlicenced companies 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 underneath the legislation for such unauthorised platforms.
“These descriptions could mislead members of the general public into believing that these crypto companies are banks authorised in Hong Kong, to which they will entrust their financial savings,” HKMA famous.
Based on the regulatory authority, crypto companies will not be accredited and controlled as banks in Hong Kong. HKMA doesn’t additionally supervise these platforms, which implies funds that folks place with these entities don’t profit from the Hong Kong Deposit Safety Scheme.
Exchanges warned in opposition to unlawful providers
Hong Kong is among the fastest-growing crypto hubs on this planet and plenty of crypto corporations, together with exchanges, have regarded to safe regulatory approval to supply services and products there.
The Hong Kong authorities’s latest unveiling of a crypto framework geared 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 supply providers and merchandise to buyers earlier than finishing the method, or extending providers not allowed underneath the legislation.