Hong Kong watchdog issues warning about foreign entities pretending to be crypto ‘banks’

The Hong Kong Financial Authority (HKMA) has warned the general public to stay vigilant towards overseas crypto firms misrepresenting themselves as banks, in accordance with a November 15 discover.

The regulator revealed that some overseas crypto firms are portraying themselves as banks to realize the belief of Hong Kong customers. Many of those entities function with out correct licenses and will not be licensed to make use of the time period “financial institution” of their branding or promotional supplies.

The HKMA harassed that such actions may breach the Banking Regulation, which regulates using banking-related phrases and actions in Hong Kong.

Offenders

The warning recognized two unnamed overseas crypto firms as violators. One reportedly referred to as itself a financial institution, whereas the opposite described its product as a financial institution card. These statements, in accordance with the HKMA, threat deceptive the general public into believing that these entities are licensed banks underneath its supervision.

The Monetary Authority clarified that solely licensed banks, restricted licensed banks and HKMA licensed depository firms are legally allowed to conduct banking or depository actions in Hong Kong.

HKMA said that the Banking Regulation prohibits unauthorized individuals or organizations from utilizing “financial institution” of their title or description. It additionally prohibits deceptive statements suggesting that an entity is a financial institution or carries out banking actions in Hong Kong.

The regulator additionally emphasised that crypto firms that aren’t acknowledged as licensed establishments in Hong Kong fall exterior the scope of the laws.

It added that overseas crypto firms that use the time period “financial institution” or model themselves as “crypto banks” licensed in different jurisdictions don’t essentially have a banking license in Hong Kong. Likewise, services or products labeled “financial institution” could not come from licensed banks within the area.

The warning comes amid Hong Kong’s latest determination to broaden its record of licensed crypto exchanges by the top of the 12 months.

Regardless of its fame as a serious Asian crypto hub, Hong Kong maintains a rigorous licensing course of. Thus far, solely three crypto exchanges – OSL Alternate, HashKey Alternate and HKVAX – have secured licenses.

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