The Hong Kong Monetary Authority (HKMA), the region’s central bank, has warned consumers that crypto firms posing as banks and employing banking language such as “crypto bank,” “digital asset bank,” and “crypto asset bank,” could potentially be violating the region’s financial regulations.
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Hong Kong Central Bank Warns Investors
Based on a news statement from the HKMA, utilizing specific phrases from the banking industry could mislead the public into believing that cryptocurrency companies are legitimate banks in Hong Kong.
Only Authorized Institutions are Allow to Provide Banking Services
However, the central bank emphasized the fact that only authorized institutions are permitted to conduct banking or deposit-taking services in the Special Administrative Region (SAR) of China in accordance with the region’s banking legislation. As per HKMA laws, it is illegal for people or corporations to incorporate the term “bank” in the title or advertisement for their company unless they are authorized institutions.
Crypto Banks are not Banks
The HKMA stressed that the central bank does not have control over cryptocurrency companies considering that they do not fall under ‘banks’. This indicates that the so-called “crypto banks'” deposits have not been protected by the region’s protected deposit program.
A warning was also issued over the cryptocurrency exchange JPEX on 15 September by the Securities and Futures Commission (SFC) of the area for illegally offering its goods and services in Hong Kong without first obtaining a license or submitting an application for such.
Regulatory Environment in Hong Kong
According to a report by TheCoinRise, the HKMA pushed the financial institutions not to burden crypto firms that planned to establish headquarters in the city with investigating potential clients in particular.
Due to Hong Kong’s determination to concentrate on developing its digital asset economy, the city has seen a significant influx of new companies. In an endeavor to maintain a safe and stable financial sector, the SAR is currently taking steps to adopt a strict regulatory approach. As a result, Hong Kong has just been identified as the state that is most prepared for cryptocurrencies in 2023.
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