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Hong Kong's main banking regulator, the Hong Kong Monetary Authority (HKMA), has raised alarms over cryptocurrency entities portraying themselves as licensed banks. This move comes after the regulator observed certain crypto enterprises employing banking language, potentially misleading the general public into believing they hold proper authorization in Hong Kong.
The HKMA expressed concerns over these companies' use of terminology such as "crypto bank," "digital asset bank," and "crypto asset bank." These phrases might suggest that these enterprises offer legitimate banking services and accounts. However, the HKMA was clear in its stance, emphasizing that only duly licensed entities can provide banking or accept deposits in Hong Kong.
Stressing the point further, the HKMA revealed that aside from recognized institutions, it's illegal for any business or individual to incorporate the term "bank" in their company's name or description. It's equally unlawful to accept deposits without the requisite license.
The authority further clarified that cryptocurrency companies which aren't actual banks don't come under the purview of the central bank's supervision. Consequently, deposits made with these pseudo "crypto banks" aren't covered by Hong Kong's deposit protection mechanism.
In related developments, Hong Kong has been rigorously monitoring and penalizing those disregarding its licensing requirements. Notably, on September 15, the region’s financial regulatory body, the Securities and Futures Commission (SFC), flagged crypto exchange JPEX. The exchange had reportedly been advertising its offerings in Hong Kong without obtaining the necessary license or even applying for one.
Subsequent to the warning from the SFC, JPEX's team was notably absent from its Token 2049 stall in Singapore. Furthermore, in what appears as a maneuver to deter clients from withdrawing their capital, the exchange significantly increased its withdrawal fees, pushing it to an astonishing 999 Tether (USDT).
