Hong Kong Central Bank Raises Concerns Over Misleading Crypto

The Hong Kong Monetary Authority (HKMA) has expressed concerns regarding the use of banking terminology by certain cryptocurrency businesses. Notably, the HKMA clarifies that funds deposited in unlicensed “crypto banks” are not protected under Hong Kong’s deposit protection scheme. The HKMA advises users to exercise caution due to potential risks associated with these entities.

In an official statement, the HKMA alerted the public about crypto businesses that present themselves as banks by using specific banking terms. However, the HKMA clarified that only licensed institutions, in accordance with regional banking laws, are permitted to engage in banking or deposit-taking activities within the territory.

The central bank has specifically highlighted the usage of specific terms, namely “crypto bank,” “digital asset bank,” and “crypto asset bank,” as well as any claims of providing banking services or accounts. Descriptions using these terms may potentially breach the law and mislead the public about the regulatory status of such entities.

The HKMA states that it is illegal for people or businesses to use the term “bank” or similar expressions in their company names or descriptions without proper authorization. Moreover, conducting deposit-taking activities without the required license is recognized as a violation of existing laws.

The Hong Kong Monetary Authority (HKMA) emphasizes that entities operating as “crypto banks” without being recognized as banking institutions are not subject to supervision by the central bank. Consequently, any funds deposited in these alleged “crypto banks” are not covered by Hong Kong’s deposit insurance scheme.

HKMA’s Vigilance on Crypto Business Terminology

The recent cautionary message from the HKMA highlights the importance of accurate and transparent terminology in the growing crypto industry.

The regulatory body remains dedicated to protecting public interests and upholding compliance with established banking laws. They urge users to be vigilant when dealing with entities that employ misleading banking terms in the cryptocurrency realm.

The author’s views are for reference only and shall not constitute investment advice. Before purchasing, please ensure you fully understand and assess the products and associated risks.