The Hong Kong Monetary Authority (HKMA), the special administrative region’s central bank, has cautioned that crypto businesses claiming to be banks and using banking terminology may be violating the region’s banking laws.
In a press release, the HKMA stated that the use of specific banking terms could mislead the public, leading users to believe that the crypto firms are authorized banks in Hong Kong. However, the central bank emphasized that only licensed institutions are permitted to engage in banking or deposit-taking activities in Hong Kong, according to the region’s banking laws.
The central bank alerted the public that companies referring to themselves as “crypto bank,” “digital asset bank,” or “crypto asset bank,” or claiming to offer banking services or banking accounts, might be in violation of the law.
According to the HKMA, other than authorized institutions, it is illegal for individuals or businesses to use the term “bank” in their company names or descriptions. Furthermore, facilitating deposits without the proper license is also considered a breach of the law.
The HKMA reminded the public that crypto firms that are not banks are not supervised by the central bank, which means that funds held in so-called “crypto banks” are not covered by the region’s deposit protection scheme.
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In recent times, Hong Kong has been cracking down on those who violate its licensing laws. On September 15, the region’s Securities and Futures Commission (SFC) issued a warning to crypto exchange JPEX for allegedly promoting its products and services in Hong Kong without obtaining or applying for a license.
Following the SFC’s warning, the exchange’s staff reportedly disappeared from its Token 2049 booth in Singapore. The exchange also increased its withdrawal fees to as much as 999 Tether (USDT), in an attempt to discourage users from retrieving their funds from the platform.
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