FameEX Hot Topics | Bitcoin Sets New Milestone with 703,000 Transactions in a Single Day Amid Rising Demand

On September 10th, the Hong Kong Monetary Authority (HKMA) made a significant announcement aimed at addressing the mounting concerns surrounding cryptocurrency companies disguising themselves as banks and offering products they label as "deposits." The HKMA delivered a resolute message, firmly asserting that these actions constitute a direct violation of the region's Banking Ordinance. More importantly, it emphasized the potential for these deceptive practices to mislead the public, fostering an unwarranted sense of trust in these crypto entities.

Subsequently, on September 15th, the HKMA followed up with a compelling call to action directed at cryptocurrency enterprises. It implored them to immediately cease their deceptive practices. In doing so, the regulator underscored its awareness of numerous crypto businesses that have assumed the guise of crypto asset banks and digital banks. Furthermore, the HKMA issued an explicit warning to crypto firms that lay claim to providing banking services or facilitating the opening of banking accounts. The regulator emphasized that such misleading representations have the capacity to lead members of the public astray, inducing them to mistakenly place faith in the financial reliability and stability of these cryptocurrency firms.

Beneath this stern advisory stance lies a fundamental principle. The HKMA unequivocally posits that no cryptocurrency firm should exploit terminology commonly associated with traditional banks as a means to attract prospective clients. This assertion finds its foundation in the Banking Ordinance, a legal framework that exclusively grants licensed banks, restricted license banks, and deposit-taking companies the privilege of conducting banking or deposit-taking activities within the jurisdiction of Hong Kong, subject to approval by the HKMA.

Taking their regulatory commitment a step further, the HKMA declared that any unauthorized entities employing the term "bank" or making representations that suggest their involvement in banking activities within Hong Kong are committing a breach of the law.

In addition to these warnings, the HKMA seized the opportunity to remind the residents of Hong Kong of a crucial point. Given that it does not have oversight or regulatory authority over cryptocurrency firms, any funds entrusted to them do not fall under the protection of the Hong Kong Deposit Protection Scheme. This underscores the imperative for investors and customers to exercise vigilance and conduct thorough due diligence when engaging with cryptocurrency entities. To ascertain the legitimacy and status of a deposit-taking entity, the HKMA recommended consulting the "register of authorized institutions on the HKMA's website."

In summation, the HKMA's declarations carry a clear and resounding message. They serve as an unmistakable caution to the rapidly evolving cryptocurrency sector in Hong Kong. The regulator is resolute in its commitment to safeguarding the interests of the public, championing the integrity of financial terminology, and ensuring that all entities engaged in financial activities adhere scrupulously to the established legal framework.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.