The Hong Kong Monetary Authority (HKMA) has issued a stern warning regarding cryptocurrency businesses that present themselves as banks and employ banking terminology, potentially violating Hong Kong’s banking laws.
In an official press release, the HKMA expressed concern that the use of specific banking terms by crypto companies might mislead the public into believing that these firms are authorized banks operating within Hong Kong. However, the central bank emphasized that, according to the region’s banking laws, only licensed institutions are permitted to engage in banking or deposit-taking activities in Hong Kong.
The central bank issued a public alert, cautioning against companies that label themselves with phrases such as “crypto bank,” “digital asset bank,” or “crypto asset bank” or claim to offer banking services or accounts, as they may be in violation of the law.
According to the HKMA, aside from authorized institutions, it is illegal for individuals or businesses to incorporate the term “bank” into their company names or descriptions. Furthermore, facilitating deposit-taking activities without the necessary license is also considered a breach of the law.
The HKMA reminded the public that cryptocurrency firms, which are not recognized as banks, fall outside the purview of the central bank’s supervision. Consequently, any funds deposited with these so-called “crypto banks” are not safeguarded by Hong Kong’s deposit protection scheme.
In recent times, Hong Kong has taken strong measures against entities breaching its licensing regulations. On September 15, the region’s Securities and Futures Commission (SFC) issued a warning to the crypto exchange JPEX for allegedly promoting its products and services in Hong Kong without obtaining the requisite license. Subsequently, staff members from the exchange reportedly disappeared from its Token 2049 booth in Singapore, and it introduced higher withdrawal fees, peaking at 999 Tether (USDT), in an apparent attempt to discourage users from withdrawing their funds from the platform.