The Hong Kong Monetary Authority (HKMA) has issued a warning to users about the use of certain banking terms by crypto businesses that could be violating the region’s banking laws. The central bank emphasized that only licensed institutions are allowed to carry out banking or deposit-taking businesses in Hong Kong.
In a press release, the HKMA highlighted that the use of words like “crypto bank,” “digital asset bank,” and “crypto asset bank,” or claims to be offering banking services or banking accounts may be misleading the public into thinking that these crypto firms are authorized banks in Hong Kong. However, it is unlawful for persons or businesses, other than authorized institutions, to use the word “bank” in their company names or descriptions.
Additionally, the HKMA warned that facilitating the taking of deposits without the proper license is also a violation of the law. It reminded the public that crypto firms that are not banks are not supervised by the central bank. Therefore, funds placed within these so-called “crypto banks” are not protected by the region’s deposit protection scheme.
This warning from the HKMA comes as Hong Kong has been cracking down on violators of its licensing laws. Recently, the region’s Securities and Futures Commission (SFC) issued a warning against crypto exchange JPEX for allegedly promoting its products and services in Hong Kong without securing a license or applying for one.
Following the warning, JPEX’s staff disappeared from its Token 2049 booth in Singapore, and the exchange increased its withdrawal fees to discourage users from retrieving their funds.
It is crucial for users in the crypto space to be aware of the regulatory framework and ensure they are conducting business with authorized institutions that comply with the region’s banking laws. The HKMA’s warning serves as a reminder to the public to exercise caution and verify the legitimacy of any crypto business claiming to offer banking services in Hong Kong.
In conclusion, it is essential for both crypto businesses and users to adhere to the regulations set by the HKMA and other relevant authorities. By doing so, they can ensure the protection of their funds and avoid legal consequences associated with non-compliance.