The Hong Kong Monetary Authority (HKMA), the central bank of the special administrative region, has issued a warning to users about crypto businesses that present themselves as banks and use banking terminology. The HKMA stated that the use of certain banking terms may mislead the public into thinking that these 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 the region, according to its banking laws.
The HKMA cautioned 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 in violation of the law. Under the HKMA’s regulations, it is unlawful for individuals or businesses, other than authorized institutions, to use the word “bank” in their company names or descriptions. Additionally, facilitating the acceptance of deposits without the appropriate license is also considered a violation.
It is important to note that crypto firms that are not banks are not supervised by the HKMA. Consequently, funds placed within these so-called “crypto banks” are not protected by the region’s deposit protection scheme.
Hong Kong has recently been cracking down on violators of its licensing laws. On September 15, the Securities and Futures Commission (SFC) of Hong Kong issued a warning against JPEX, a crypto exchange, for allegedly promoting its products and services in the region without obtaining a license. In response to the SFC’s warning, the exchange’s staff disappeared from its Token 2049 booth in Singapore and increased its withdrawal fees to discourage users from retrieving their funds.
It is crucial for users to be aware of the regulatory landscape and exercise caution when dealing with crypto businesses that may not be authorized or supervised by the HKMA.
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