The Hong Kong Monetary Authority (HKMA), the central bank of the Hong Kong Special Administrative Region, issued a warning to users that cryptocurrency businesses impersonating banks and using banking jargon may violate the region’s banking laws.
The HKMA said in a press release that the use of certain banking terminology may mislead the public, leading users to believe that cryptocurrency companies are authorized banks in Hong Kong. However, the central bank emphasized that according to the Hong Kong Banking Law, only licensed institutions can carry out banking or deposit-taking business in Hong Kong.
The central bank warned the public that companies that use terms such as “crypto bank,” “digital asset bank” and “crypto asset bank” to describe themselves or claim to provide banking services or bank accounts may be breaking the law.
According to the Hong Kong Monetary Authority, it is illegal for any person or business, other than an authorized institution, to use the word “bank” in its company name or description. In addition, it is illegal to facilitate the taking of deposits without the appropriate license.
The MAS reminds the public that non-bank cryptocurrency companies are not regulated by the central bank. This means that funds held in so-called “cryptocurrency banks” are not protected by the region’s deposit protection scheme.
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Hong Kong has recently been cracking down on violations of licensing laws. On September 15, Hong Kong’s Securities and Futures Commission (SFC) issued a warning to cryptocurrency exchange JPEX for allegedly promoting its products and services in Hong Kong without obtaining a license or applying for a license.
The exchange’s staff appeared to disappear from the Token 2049 booth in Singapore following a warning from the Securities and Futures Commission. It has also increased withdrawal fees to a maximum of 999 Tether (USDT), a move that attempts to discourage users from withdrawing funds from the exchange.
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