The Hong Kong Monetary Authority (HKMA) has issued a stern warning to cryptocurrency businesses operating under its jurisdiction. In particular, he warned against the use of misleading banking terminology that could potentially violate the territory’s banking laws. Here are the details…
Warning issued against these cryptocurrency companies
In a press release, the HKMA expressed concern about the potential for some crypto businesses adopting terminology associated with traditional banks to mislead the public into believing that these firms are authorized banking institutions in Hong Kong. The central bank highlighted that under Hong Kong’s strict banking regulations, only licensed financial institutions are allowed to conduct banking or deposit-taking activities in the territory. In particular, the HKMA’s statement identified the use of terms such as “crypto bank”, “digital asset bank” and “crypto asset bank”, as well as claims to provide banking services or accounts, as activities that could constitute legal breaches.
According to the HKMA, any organization other than those with valid licences, is prohibited from including the word “bank” in their business name or description. Additionally, accepting deposits without the necessary license is also considered a serious violation of the law. The HKMA took the opportunity to remind the public that crypto businesses that do not fall under the category of traditional banks are not subject to the regulatory oversight of the central bank. This lack of oversight means funds entrusted to so-called “crypto banks” are not covered by the district’s deposit protection plan, potentially exposing investors to higher risks.
There were some warnings before.
Recent developments in Hong Kong appear to demonstrate the territory’s determination to enforce licensing laws in the cryptocurrency sector. Just a few days ago, on September 15, the territory’s Securities and Futures Commission (SFC) cracked down on JPEX, a cryptocurrency exchange, for allegedly promoting its products and services in Hong Kong without obtaining the necessary license or applying for it. He warned. As Kriptokoin.com reported, following the SFC’s warning, JPEX’s staff mysteriously disappeared from its booth at the Token 2049 event in Singapore.
In addition, the exchange has imposed significant withdrawal fees, reaching up to 999 Tether (USDT), in an attempt to deter users from withdrawing their funds from the platform. As a result, the HKMA reminds members of the public that crypto firms that are not banks in Hong Kong are not regulated by the HKMA and funds deposited with these firms are not protected by the Hong Kong Deposit Protection Scheme. If in doubt about any entity claiming to be a bank or soliciting deposits in Hong Kong, members of the public should verify whether the entity is authorized to conduct such business by consulting the register of authorized institutions on the HKMA’s website.
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