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Join WhatsApp channelThe Hong Kong Monetary Authority (HKMA) has issued a warning to the public regarding cryptocurrency companies that portray themselves as banks potentially violating local banking regulations.
In a statement, the HKMA cautioned that the use of banking-related terminology might lead individuals to mistakenly believe that these crypto firms are licensed financial institutions in Hong Kong. The authority clarified that approved institutions are legally permitted to engage in banking or deposit-related activities within the region as dictated by local laws.
The HKMA stressed that companies using terms such as ” bank,” “digital asset bank ” or “crypto asset bank ” or those claiming to provide traditional banking services could be operating unlawfully.
Furthermore, the HKMA emphasized that it is illegal for any company name or description to include the word “bank” unless it has obtained authorization. Engaging in deposit-taking activities without licensing is also against the law.
The authority also reminded the public that non-bank cryptocurrency entities are not regulated by the HKMA. Consequently, any funds deposited with these called “crypto banks” are not protected under Hong Kong’s financial safety net specifically referring to the deposit protection scheme.
Recent regulatory initiatives in Hong Kong have witnessed enforcement actions, against individuals found in violation of licensing regulations.
For instance, on September 15th the Securities and Futures Commission (SFC) in the region issued a statement regarding the JPEX cryptocurrency exchange for promoting its services in Hong Kong without acquiring the required licenses.
Following the SFC warning the exchange implemented changes that made it more challenging for users to withdraw their funds by raising their withdrawal fees. Additionally, their representatives unexpectedly left their booth at the Token 2049 event, in Singapore.
