The Hong Kong Monetary Authority (HKMA) has issued a warning to users about crypto businesses that present themselves as banks and use banking terminology, stating that they may be violating the region’s banking laws. In a press release, the HKMA emphasized that the use of certain banking terms can mislead the public into thinking that these crypto firms are authorized banks in Hong Kong. However, the central bank clarified that only licensed institutions are allowed to engage in banking or deposit-taking activities in the region.
The central bank specifically cautioned the public against firms that describe themselves as “crypto banks,” “digital asset banks,” or “crypto asset banks,” as well as those that claim to offer banking services or accounts. According to the HKMA, aside from authorized institutions, it is illegal for individuals or businesses to use the word “bank” in their company names or descriptions. Additionally, facilitating the acceptance of deposits without the proper license is also considered a violation of the law.
It is essential for the public to be aware that crypto firms that are not banks are not supervised by the HKMA. Consequently, funds deposited in so-called “crypto banks” are not protected by the region’s deposit protection scheme. This warning serves as a reminder to consumers to exercise caution when dealing with crypto businesses that falsely present themselves as banks.
In recent times, Hong Kong has been cracking down on violators of its licensing laws. Just earlier this month, the region’s Securities and Futures Commission (SFC) issued a warning to JPEX, a crypto exchange, for allegedly promoting its products and services in Hong Kong without obtaining a license. The exchange’s staff seemed to have disappeared from its booth at the Token 2049 event in Singapore following the SFC’s warning. Furthermore, JPEX increased its withdrawal fees, up to 999 Tether (USDT), in an attempt to discourage users from withdrawing their funds from the exchange.
This latest warning from the HKMA further indicates the regulatory authorities’ efforts to ensure compliance within the crypto industry. By reminding the public of the banking laws in place, the central bank aims to protect consumers from potential scams and unauthorized operations. It is crucial for individuals and businesses alike to adhere to the legal requirements and exercise due diligence when engaging with crypto-related activities.
As the crypto industry continues to evolve and gain mainstream attention, it is expected that regulatory bodies will further tighten regulations to safeguard the interests of both investors and the overall financial stability of the region. With a greater emphasis on transparency and compliance, the path towards a more regulated and secure crypto ecosystem in Hong Kong becomes clearer.
Source link