As we speak, the Hong Kong Financial Authority (HKMA) issued a warning to cryptocurrency corporations that improperly use the time period “financial institution” in describing their providers.
The authority acknowledged that such wording wrongly suggests these corporations are regulated by the HKMA, which isn’t the case. In keeping with HKMA guidelines, solely organizations with particular licenses can function as banks in Hong Kong.
“Underneath the Banking Ordinance, solely licensed banks, restricted license banks and deposit-taking corporations, which have been granted a license by the HKMA can perform banking or deposit-taking enterprise in Hong Kong,” the HKMA clarified in its assertion.
Crypto corporations are additionally not allowed to check their providers to conventional banking providers, nor can they encourage clients to open “banking accounts” or label their choices as “deposits.”
Regulatory Actions on Deceptive Crypto Corporations
This alert from the HKMA follows one other from the Hong Kong Securities and Futures Fee (SFC) focusing on a crypto buying and selling platform generally known as JPEX. The SFC criticized JPEX for utilizing phrases like “crypto ‘deposits,’ ‘financial savings,’ or ‘earnings,’ which aren’t permitted below the SFC’s oversight framework for crypto buying and selling platforms.”
The SFC additionally rebuked JPEX for portraying itself as a licensed entity, regardless of not having utilized for or acquired any such license.
In an analogous vein, again in August, the SFC warned the general public about unlicensed crypto platforms that have been concerned in questionable actions. In keeping with the SFC, platforms that declare to have utilized for licenses “might not be in compliance with the authorized and regulatory necessities below the brand new regime.”
Misrepresenting an organization as a licensed entity when it has not acquired authorization can be an offense, very like the misuse of the time period “financial institution” by crypto corporations.
The Altering Panorama of Hong Kong Crypto Regulation
Earlier this 12 months, Hong Kong made a number of strikes to grow to be extra welcoming to crypto companies, together with the initiation of a Central Financial institution Digital Forex (CBDC) trial. But, as these latest warnings point out, the authorities are taking a balanced strategy to crypto regulation, guaranteeing that corporations don’t mislead the general public or function exterior the bounds of established rules.
In brief, whereas Hong Kong has made efforts to grow to be extra accommodating to crypto companies, the latest actions by HKMA and SFC present that they don’t seem to be letting their guard down by way of crypto rules. The authorities are diligently working to make sure that the general public shouldn’t be misled by corporations working within the hong kong crypto market.