Hong Kong’s central bank, the Hong Kong Monetary Authority (HKMA), has warned users that cryptocurrency companies that present themselves as banks and use banking terminology could be violating the law. Banks in the region.
In a press release, the HKMA stated that the use of certain banking terms could mislead the public, causing users to think that cryptocurrency companies are licensed banks in Hong Kong. However, the central bank stressed that under the region’s banking laws, only licensed institutions are allowed to 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 “crypto asset bank,” or claim to offer banking services or bank accounts, could be violating the law.
According to the HKMA, except for authorized institutions, it is illegal for individuals or companies to use the word “bank” in the name or description of their businesses. Furthermore, facilitating deposits without a proper license is also a violation of the law.
The HKMA reminded the public that non-bank cryptocurrency companies are not supervised by the central bank. This means that funds deposited with so-called “cryptocurrency banks” are not protected by the region’s deposit insurance system.
Hong Kong has recently toughened its stance on violations of its licensing laws. On September 15, the region’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.
After the SFC warning, exchange employees apparently disappeared from the Token 2049 booth in Singapore. Additionally, they have significantly increased their withdrawal fees to a maximum of 999 Tether (USDT) to discourage users from withdrawing their funds from the exchange.
