Hong Kong central bank warns against crypto firms using banking terms

The Hong Kong Mon­e­tary Author­i­ty (HKMA), the spe­cial admin­is­tra­tive region’s cen­tral bank, has issued a warn­ing to users that cryp­to busi­ness­es pre­sent­ing them­selves as banks and using bank­ing ter­mi­nol­o­gy could be vio­lat­ing the region’s bank­ing laws. 

In a press release, the HKMA said that the use of cer­tain bank­ing terms may be mis­lead­ing the pub­lic, caus­ing users to think that the cryp­to firms are autho­rized banks in Hong Kong. How­ev­er, the cen­tral bank high­light­ed that under the region’s bank­ing laws, only licensed insti­tu­tions are allowed to car­ry out bank­ing or deposit-tak­ing busi­ness­es in Hong Kong. 

The cen­tral bank warned the pub­lic that firms describ­ing them­selves with words like “cryp­to bank,” “dig­i­tal asset bank,” and “cryp­to asset bank” or claims to be offer­ing bank­ing ser­vices or bank­ing accounts may be break­ing the law. 

Accord­ing to the HKMA, oth­er than autho­rized insti­tu­tions, it’s unlaw­ful for per­sons or busi­ness­es to use the word “bank” in the name or descrip­tions of their com­pa­nies. In addi­tion, facil­i­tat­ing the tak­ing of deposits with­out the prop­er license is also a vio­la­tion of the law. 

The HKMA remind­ed the pub­lic that cryp­to firms which are not banks are not super­vised by the cen­tral bank. This means that funds placed with­in the so-called “cryp­to banks” are not pro­tect­ed by the region’s deposit pro­tec­tion scheme. 

Relat­ed: Hong Kong’s cryp­to stance: Execs weigh in on Web3 in the region

Hong Kong has recent­ly been crack­ing down on vio­la­tors of its licens­ing laws. On Sept. 15, the region’s Secu­ri­ties and Futures Com­mis­sion (SFC) issued a warn­ing against cryp­to exchange JPEX for alleged­ly pro­mot­ing its prod­ucts and ser­vices in Hong Kong with­out secur­ing a license or apply­ing for one. 

Fol­low­ing the SFC’s warn­ing, the exchange’s staff seem­ing­ly dis­ap­peared from its Token 2049 booth in Sin­ga­pore. It also ramped up its with­draw­al fees to up to 999 Teth­er (USDT), a move that tried to dis­cour­age users from retriev­ing their funds from the exchange. 

Mag­a­zine: China’s blockchain satel­lite in space, Hong Kong’s McNuggets Meta­verse: Asia Express