Hong Kong’s central bank, the Hong Kong Monetary Authority (HKMA), has issued a warning to users that cryptocurrency companies presenting themselves as banks and using banking terminology could be violating the region’s banking laws.
In a press release, HKMA claimed The use of certain banking terms could mislead the public, making users believe that cryptocurrency companies are licensed banks in Hong Kong. However, the central bank stressed that under the region’s banking laws, only licensed institutions can conduct banking or deposit-taking activities in Hong Kong.
The central bank warned the public that companies that describe themselves with words such as “cryptocurrency bank,” “digital asset bank,” and “cryptoasset bank” or that claim to provide banking services or bank accounts could be violating the law.
According to the HKMA, except for licensed institutions, it is illegal for individuals or companies to use the word “bank” in the name or description of their company. Furthermore, facilitating deposit taking without proper licensing is also a violation of the law.
The Hong Kong Monetary Authority reminded the public that non-bank cryptocurrency companies are not subject to the supervision of the central bank. This means that funds deposited in so-called “cryptocurrency banks” are not protected under the region’s deposit protection system.
Hong Kong has toughened its stance against violators of its licensing laws recently. On September 15, the territory’s Securities and Futures Commission (SFC) issued a warning against cryptocurrency exchange JPEX for allegedly promoting its products and services in Hong Kong without obtaining or applying for a license.
Following the SFC’s warning, exchange employees apparently disappeared from the Token 2049 kiosk in Singapore. In addition, they have significantly increased the withdrawal fee to a maximum of 999 Tether (USDT), in an attempt to discourage users from withdrawing their funds from the exchange.
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