On September 10, the Hong Kong Monetary Authority (HKMA) stated that crypto companies that portray themselves as banks are violating the region’s Banking Ordinance.
The HKMA explained that such representations might lead the public to believe these crypto firms are trustworthy financial institutions.
Misleading Descriptions Breach Banking Ordinance
The Hong Kong Monetary Authority (HKMA) has advised crypto companies to refrain from falsely representing themselves as banks or labeling their products as ‘deposits.’ The financial services regulator of Hong Kong stated that crypto firms engaged in such practices are violating the Banking Ordinance of Hong Kong.
In a statement issued on September 15, the HKMA acknowledged that some crypto businesses present themselves as crypto asset banks and digital banks. The regulator also cautioned crypto firms that claim to offer banking services or accounts. The HKMA explained that such descriptions might mislead the public into thinking these crypto firms are reliable financial institutions.
HKMA Lacks Oversight of Crypto Firms
The regulator made it clear that crypto companies should not use terms commonly associated with banks when attracting customers. According to the HKMA:
“Only licensed banks, restricted license banks, and deposit-taking companies (collectively referred to as ‘authorized institutions’), which have received a license from the HKMA, can conduct banking or deposit-taking business in Hong Kong under the Banking Ordinance.”
The regulator also pointed out that unauthorized institutions using the term “bank” or implying that they are a bank or conducting banking business in Hong Kong are breaking the law.
Furthermore, the HKMA cautioned Hong Kong residents that as it does not oversee crypto companies, any funds placed with them are not protected by the Hong Kong Deposit Protection Scheme. The regulator recommended that residents verify the status of a deposit-taking firm by checking the register of authorized institutions on the HKMA’s website if they have any doubts.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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