The Hong Kong Monetary Authority (HKMA) has warned the public about cryptocurrency companies that pose as banks and use banking terminology.
Hong Kong Cautions Crypto Companies Against Using Banking Terminology
The Hong Kong Monetary Authority (HKMA) has warned the public about cryptocurrency companies that pose as banks and use banking terminology, claiming that such conduct may violate the region's banking rules.
According to the existing banking rules, only licenced institutions are permitted to engage in banking or deposit-taking activities in Hong Kong, according to the HKMA. Companies that call themselves "crypto banks," "digital asset banks," or "crypto asset banks" and claim to provide banking services or accounts may be breaking the law, according to the central bank.
Individuals or enterprises other than authorized institutions are not permitted to use the term "bank" in their corporate names or descriptions, according to the HKMA. Furthermore, facilitating deposits without the requisite license is a violation of the law. The HKMA warned the public that crypto businesses that are not recognised as banks are not subject to central bank oversight. As a result, funds held in so-called "crypto banks" are not covered by Hong Kong's deposit insurance plan.
Hong Kong has recently become more stringent in enforcing licensing restrictions. The Securities and Futures Commission (SFC) of Hong Kong issued a warning to JPEX, a cryptocurrency exchange, on 15 September for allegedly promoting its products and services in the region without having the necessary license. Following the SFC's warning, JPEX's employees are said to have fled from its exhibit at the Token 2049 event in Singapore. The exchange allegedly raised its withdrawal fees up to 999 USDT to deter users from withdrawing their funds.
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