Key Points:
The Hong Kong Monetary Authority (HKMA), the central bank of the Hong Kong Special Administrative Region, has issued a stern warning to cryptocurrency companies against impersonating banks and employing banking terminology, cautioning that such practices could potentially violate the region’s banking laws.
In a press release, the HKMA expressed concern that the use of specific banking terminology by crypto entities might mislead the public, creating the false impression that these companies are authorized banks operating within Hong Kong. It is important to note that, under the Hong Kong Banking Law, only licensed institutions are permitted to engage in banking or deposit-taking activities within the jurisdiction.
The central bank has specifically cautioned individuals and companies that employ terms like “crypto bank,” “digital asset bank,” or “crypto asset bank” to describe their services or purport to offer banking services or accounts. Such usage of terminology may constitute a breach of the law.
To underscore this point, the Hong Kong Monetary Authority has clarified that, except for authorized institutions, it is illegal for any person or business to incorporate the term “bank” within their company name or description. Furthermore, facilitating deposits without the requisite license is also a violation of the law.
Importantly, the HKMA wants the public to be aware that non-bank cryptocurrency firms do not fall under its regulatory oversight. Consequently, funds held within so-called “cryptocurrency banks” are not afforded the protection of the region’s deposit insurance scheme.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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