The Hong Kong Financial Authority (HKMA) cautioned the general public about sure abroad crypto companies misusing the phrase “financial institution” of their advertising and marketing and descriptions.
On 15 November 2024 HKMA mentioned, “Solely licensed banks, restricted license banks, and deposit-taking firms approved by the HKMA are permitted to conduct banking or deposit-taking actions within the area.”
Alert: Please be cautious about crypto companies which can have misused the phrase “financial institution”. Sure abroad crypto companies, in current occasions in HK, have been reported to have made the illustration that the agency was a “financial institution” or supplied card product as “financial institution card” on the agency’s web site. pic.twitter.com/Va5ebhhbTI
— HKMA 香港金融管理局 (@hkmagovhk) November 15, 2024
Misusing Time period “Financial institution” Raises Issues; May Mislead Shoppers
The HKMA reportedly recognized incidents involving two abroad crypto companies that made deceptive representations in Hong Kong.
Allegedly, one of many companies described itself as a “financial institution,” whereas the opposite referred to its card product as a “financial institution card” on its web site.
The HKMA expressed considerations round deceptive shoppers into believing that the companies are licensed banks working below supervision. “Such representations may mislead shoppers to imagine they’re licensed banks in Hong Kong and are below the HKMA’s supervision,” HKMA mentioned.
Moreover, utilizing the time period “financial institution” in names or product descriptions with out the authority’s written consent may doubtlessly be a felony offence for entities, revealed HKMA. “Beneath part 97 of the Banking Ordinance, no individual, aside from a licensed financial institution in Hong Kong or a central financial institution, could use the phrase ‘financial institution’ or its derivatives.”
The strict regulatory framework is being enforced to make sure the general public isn’t misled by unauthorized entities posing as professional banks.
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Crypto Companies That Are Not Licensed Establishments, Are Not Supervised By HKMA
The HKMA offered sources to confirm approved establishments. This encourages shoppers to seek the advice of the HKMA’s register of approved establishments or contact its Public Enquiry Service hotline for clarification.
Moreover, the HKMA reiterated its dedication to guard the general public from deceptive practices. It’s to make sure a transparent distinction between licensed banks and unauthorized entities. The authority mentioned, “Services or products with names carrying the phrase ‘financial institution’ usually are not essentially offered by licensed banks in Hong Kong.”
With these measures, HKMA is aiming to mitigate potential dangers posed by unauthorized entities within the rising crypto sector.
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Hong Kong’s Evolving Crypto Panorama
Hong Kong is making an attempt to place itself as a world chief in digital finance by introducing a strong regulatory framework for digital belongings.
Backed by the establishments just like the HKMA, town is cultivating a thriving digital asset ecosystem and advancing innovation within the Web3 sector.
One in all its main initiatives embody a forthcoming stablecoin regulatory framework, prioritizing fiat-backed stablecoins to make sure monetary stability.
The laws is ready to be launched by the tip of 2024.
Lately, in August, 2024, the HKMA had launched Mission Ensemble Sandbox (the Sandbox), enabling interbank settlements by experimental tokenized cash, with an emphasis on transactions involving tokenized belongings.
Furthermore, by combining stablecoins with broader efforts like Mission Ensemble, Hong Kong is constructing a complete framework for digital asset integration.
In the meantime, the HKMA has superior its e-HKD pilot program to part 2, collaborating with over 20 companies, together with distinguished entities like HSBC, Visa, Normal Chartered and DBS. This initiative explores the sensible use instances of a Central Financial institution Digital Foreign money (CBDC).
The forward-looking method aligns Hong Kong with world tendencies in digital forex adoption.
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