Hong Kong Regulator Issues A Warning Against Cryptocurrency Enterprises Misusing The Name "Banks"
The regulator's warning stated that organizations that identify themselves as banks run the risk of deceiving the public into giving them access to their savings.
Investors have been warned by the Hong Kong Monetary Authority (HKMA) to be wary of cryptocurrency businesses that refer to themselves as "banks." The financial watchdog issued a warning that it is misleading to refer to cryptocurrency businesses' products as deposits because they are not banks.
The HKMA also warned the cryptocurrency companies that they may be breaking Hong Kong's Banking Ordinance, according to a news release issued yesterday.
Warning Cryptocurrency Companies Against Using The Name “Banks”
The HKMA issued a warning that businesses that use this strategy for public marketing are breaking the Banking Ordinance. The regulator made the public aware of this fact and reminded cryptocurrency companies that only companies with HKMA licenses may refer to themselves as banks or accept deposits from the general public.
Under the Banking Ordinance, only licensed banks, restricted license banks, and deposit-taking companies (collectively known as “Authorized Institutions”), which are licensed by the HKMA, may conduct banking or deposit-taking activities in Hong Kong. Can do business.“The regulator warned through a Press release Published on Friday.
Digital banks, crypto banks, crypto asset banks, digital trade banks, and digital asset banks should not be used or described, according to Hong Kong's financial markets watchdog. Unlicensed businesses should not represent themselves as providing banking accounts or banking services, or as referring to money paid to their accounts as "deposits."
The law also prohibits the use of phrases like "savings plan" or "low risk" and "high returns" on such unlicensed sites.
These details may mislead the public into believing that these crypto companies are authorized banks in Hong Kong to which they can entrust their savings.“HKMA noted.
The regulatory body claims that cryptocurrency businesses in Hong Kong are not as authorized and regulated as banks. Additionally, because the HKMA does not oversee these platforms, those who invest funds with these institutions are not covered by the Hong Kong Deposit Protection Scheme.
The HKMA issued a warning after the Securities & Futures Commission of Hong Kong pointed out JPEX, a virtual asset trading platform (VATP), for actions such as cryptocurrency savings, earnings, or deposits that were in violation of the SFC's VATP regulatory framework.
Additionally, JPEX has promoted itself as an authorized firm while not yet having a VATP license. Through opinion leaders and social media influencers, JPEX extensively pushed its offerings to Hong Kong citizens.
“The SFC wished to make it clear that no entity in the JPEX group is licensed by SFC.”
The company also issued a statement stating its intention and plans to apply for a cryptocurrency trading license in response to the SFC's warning. However, JPEX was unable to provide updates on the status of their application process.
In addition to altering the withdrawal fee for USDT, the cryptocurrency exchange also declared it is forming a special work group to discuss potential future development directions and other changes. The move seems to be an attempt to discourage users from withdrawing money from the exchange.
The Most Cryptocurrency-Ready Destination of Hong Kong
Many cryptocurrency businesses, including exchanges, have tried to get regulatory licenses to offer goods and services in Hong Kong, one of the world's fastest-expanding cryptocurrency centers.
Numerous participants in the crypto industry have praised a crypto framework that the Hong Kong government has announced in an effort to change the sector.
Hong Kong has been laying the groundwork for what it hopes to become a crypto center in the future, despite being close to China, a nation that is adamantly against cryptocurrency. To that end, it recently passed a number of significant crypto rules and regulations and established a special Web3 Task Force.
Hong Kong's Securities and Futures Commission (SFC) has lately advised exchanges and other providers against misrepresenting their regulatory status, despite the fact that the territory opens up the financial hub to cryptocurrencies. The regulator further requested that the exchanges refrain from providing investors with services or products before the procedure is finished or from providing services that are illegal.
For the second year running, Hong Kong was ranked first in the most crypto-ready hub category according to the most recent rankings. The hierarchy takes into account elements including a fair tax system, ease of access to cryptocurrency ATMs, a thriving startup scene, and a strong regulatory environment.
As the United States fell to third place, Switzerland took second place. Slovenia, Australia, and Canada have entered the top 10 list, indicating the growing adoption of cryptocurrencies worldwide.
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