The monetary authority of Hong Kong has issued a warning against cryptocurrency firms that are posing as banks. The new regulations have arrived at the time when Hong Kong is in the midst of welcoming crypto companies hailing from mainland China.
Some of these enterprises have plans to issue a digitized version of dollar for mortgage contracts. Hong Kong government has taken steps to encourage cryptocurrency policies in the sector.
However, regardless of the for-crypto policies of the region HKMA has issued new regulations regarding the usage of crypto asset banks, digital banks, banking services, banking accounts, and digital asset banks. As per the regulators the consumers of the services may get the wrong impression about these entities.
The regulators have invoked Section 97 of the Banking Ordinance that grant permission to regulated traditional banking enterprises who hold a license to use the term bank while advertising or introducing their services to the consumers.
Some Crypto Enterprises are Offering Massive Returns
As per the new warning issued by the HMKA, any institution found that many such businesses are offering consumers massive returns that are not at par with the traditional banking enterprises.
However, crypto firms such as Celsius started out offering big yield as high as 18% that led to its eventual downfall. Alex Mashinsky, the founder of Celsius posed as an anarchist figure to the public who swooped to save the public from the horrible banking giants.
However, in reality prosecutions have purported that he was not honest with the public about the actual risk management policies of his firm and also faked the financial stability of the business.
Considering these developments, Celsius ended up filing for a bankruptcy in July last year becoming the biggest crypto lender to fold operations. Hong Kong officials have expressed their position earlier maintaining that they are going to maintain a firm regulatory stance towards the crypto sector.
Hong Kong’s Regulator Warns JPEX for Offering Suspicious Services
The firm has received alert for offering suspicious services and features to the consumers and making false claims about obtaining a regulatory certification. It is important to note that HKSFC has recently amended its requirements for registration as custodial and exchange capital requirements.
Therefore, many exchange platforms in the region have applied for a new certification with the regulator. However, the officials at HKFSC have revealed that JPEX is not among the exchanges that have applied for a renewal of its license. An official from the agency told media that JPEX is not a listed entity with SFC and it has also not applied for a VATP license.
The official website of the exchange platform claims that it is working on creating a Web3 community that also retained that it is compliant with all the regulatory requirements in addition to having a license.
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