The Hong Kong Monetary Authority (HKMA) has cautioned the public about crypto businesses misleadingly presenting themselves as banks or using banking language, which can be in violation of local banking laws. The central bank emphasized that using such terminology can misguide users into believing that these crypto firms are authorized banking institutions within the region.
HKMA highlighted that only legitimate, licensed institutions are allowed to carry out traditional banking or deposit-taking services under Hong Kong’s banking laws. It expressed concern about firms branding themselves with labels such as “crypto bank,” “digital asset bank,” or “crypto asset bank,” or claiming to offer banking-like services. Such companies might be stepping over the legal line under existing policies.
HKMA further added that, outside of authorized establishments, it is illegal for individuals or companies to use the term “bank” in their company name or descriptors. Companies facilitating deposits without the necessary licensing are also breaking the law.
Banks in Hong Kong are sanctioned and supervised by HKMA. Therefore, funds placed with “crypto banks,” which are not under the purview of the central bank, are not guarded by the region’s deposit protection scheme.
Recently, Hong Kong authorities have intensified efforts to clamp down on entities flouting their licensing regulations. The region’s Securities and Futures Commission (SFC) issued a warning on September 15, to crypto exchange JPEX for allegedly advertising their products and services within Hong Kong, without securing the necessary license or even applying for one. Following the SFC’s warning, JPEX’s staff were no longer present at their Token 2049 booth in Singapore and they increased their withdrawal fees up to 999 Tether to dissuade users from accessing their funds from the exchange.