March 27, 2024
Hong Kong Monetary Authority Cautions Against Crypto Firms Using Misleading Banking Terms
Policy & Regulation

Hong Kong Monetary Authority Cautions Against Crypto Firms Using Misleading Banking Terms

The Hong Kong Monetary Authority (HKMA) has warned consumers that cryptocurrency businesses that pose as banks and use banking jargon may be breaking local banking rules.

According to a news statement from the HKMA, utilizing specific phrases from the banking industry could mislead the public into believing that cryptocurrency companies are legitimate banks in Hong Kong. However, the central bank emphasized that only authorized institutions are permitted to conduct banking or deposit-taking services in Hong Kong following the region’s banking legislation.

The central bank issued a warning to the general public that businesses using terms like “crypto bank,” “digital asset bank,” and “crypto asset bank” or making promises to provide banking services or banking accounts may violate the law.

According to the HKMA, it is illegal for people or firms to utilize the word bank in the names or descriptions of their organizations unless they are recognized institutions. Additionally, it is against the law to assist in accepting deposits without the appropriate license.

The public was reminded by the HKMA that the central bank does not oversee cryptocurrency companies because they are not banks. This indicates that the so-called “crypto banks” deposits are not covered by the region’s deposit protection program.

Hong Kong has recently stepped up its efforts to prosecute anyone who violates its licensing regulations. The Securities and Futures Commission (SFC) of the region issued a warning against the cryptocurrency exchange JPEX on September 15 for allegedly advertising its goods and services in Hong Kong without first obtaining a license or making an application for one.

The workers of the exchange’s Token 2049 booth in Singapore appeared to vanish after the SFC issued its warning. Additionally, it increased withdrawal fees to as much as 999 Tether to deter consumers from taking their money out of the exchange.

Image: Freepik

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