Hong Kong Cracks Down on Crypto Firms Impersonating Banks

Sep. 18, 2023
Hong Kong Cracks Down on Crypto Firms Impersonating Banks

The Hong Kong Monetary Authority (HKMA) has issued a cautionary statement. It alerts the public to the potential violation of local banking laws by certain crypto asset businesses that present themselves as banks and employ banking terminology.

In a recent press release, the HKMA emphasized that using specific banking terms could mislead individuals. These terms might make people believe that these crypto firms are authorized banks within Hong Kong.

However, it is crucial to note that, under the jurisdiction’s banking regulations, only licensed institutions possess the legal authorization to engage in banking activities or accept deposits.

Legal Restrictions on Crypto “Banks” in Hong Kong

The central bank issued a specific warning against the use of terms like “crypto bank,” “digital asset bank,” and “crypto asset bank.” They also cautioned against claiming to provide banking services or accounts, as these actions could violate the law.

The HKMA clarified that, aside from authorized institutions, it is unlawful for individuals or entities to incorporate the term “bank” within their company names or descriptions.

Furthermore, any involvement in deposit-taking activities without the requisite license violates the prevailing legal framework. The HKMA emphasized that non-bank cryptocurrency firms lack central bank regulatory oversight.

Consequently, funds deposited into entities branding themselves as “crypto banks” do not benefit from the protection provided by the region’s deposit protection scheme.

Hong Kong has recently intensified its efforts to e­nforce licensing regulations. On September 15, the Se­curities and Futures Commission (SFC) of Hong Kong issued a warning regarding JPEX, a cryptocurrency exchange. The­ SFC accused JPEX of promoting its services in the­ region without proper licensing.

SFC issued a warning, prompting significant change­s at the exchange. The­se changes included the­ unexpected abse­nce of its staff from the Token 2049 booth in Singapore­.

There was also a significant increase in withdrawal fees, rising to 999 Tether USDT. In addition, These actions seemed to discourage users from withdrawing their funds from the exchange.

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Ammar Raza

Associate editor
Skilled in crafting compelling content, with a deep enthusiasm for blockchain technology. I offer precise and easily comprehensible perspectives on cryptocurrencies, decentralized finance, and the ever-evolving landscape. Count on me as a reliable resource to remain informed about the latest advancements in the world of crypto.