The Hong Kong Monetary Authority (HKMA) has cautioned the public that cryptocurrency companies presenting themselves as banks could be violating banking regulations in the region.
In a statement, the HKMA said firms using banking terminology like “crypto bank” or offering banking services may be misleading users into thinking they are authorized financial institutions. The central bank noted that under Hong Kong’s banking laws, only licensed entities can operate as banks or take deposits in the region.
The HKMA highlighted that it’s illegal for unlicensed businesses or persons to use the word “bank” in their names or descriptions. Providing deposit-taking services without proper licensing also breaches the law.
The regulator reminded us that as crypto companies are not banks, they are not regulated by HKMA. This means funds placed in so-called “crypto banks” do not enjoy protection under Hong Kong’s deposit insurance scheme.
Hong Kong has been clamping down on licensing breaches lately. On September 15, its Securities and Futures Commission (SFC) warned crypto exchange JPEX against unlawfully promoting its platform in Hong Kong without a license.
After the SFC notice, JPEX staff disappeared from the Token 2049 event in Singapore. The exchange also hiked withdrawal fees to up to 999 USDT, likely to deter users from withdrawing funds.
The HKMA warning comes amid a global regulatory crackdown on unregistered crypto activities. Financial watchdogs worldwide are increasingly scrutinizing crypto firms to protect consumers from potential risks.
