The Hong Kong Monetary Authority (HKMA) has cautioned users that crypto businesses identifying themselves as banks and using banking terms may be infringing on the region’s banking laws.
In a statement, the HKMA noted that the use of specific banking terms might mislead the public, creating the impression that these crypto firms are authorized banks in Hong Kong. Nonetheless, the central bank emphasized that only licensed institutions are permitted to conduct banking or deposit-taking activities in Hong Kong under the banking laws of the region.
The central bank has alerted the public that companies describing themselves as “crypto bank,” “digital asset bank,” or “crypto asset bank”, or claiming to offer banking services or accounts, may be contravening the law.
The HKMA explained that, aside from authorized institutions, it is unlawful for individuals or businesses to incorporate the word “bank” in their company names or descriptions. Furthermore, facilitating deposits without the proper license is also considered a violation of the law.
The HKMA also reminded the public that crypto firms, which are not banks, are not supervised by the central bank. Consequently, funds held in so-called “crypto banks” are not protected by the region’s deposit protection scheme.
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In recent times, Hong Kong has been cracking down on individuals and entities that breach its licensing laws. On September 15, the region’s Securities and Futures Commission (SFC) cautioned crypto exchange JPEX for allegedly promoting its products and services in Hong Kong without obtaining a license or applying for one.
Following the warning from the SFC, the exchange’s staff seemed to vanish from its Token 2049 booth in Singapore. The exchange also increased its withdrawal fees to discourage users from withdrawing their funds from the platform.
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