The Hong Kong Monetary Authority (HKMA) recently issued a warning to crypto companies about improperly using the term “bank” to describe their services. This wording wrongly implies that they are regulated by the HKMA, which is not the case. As per the Banking Ordinance, only licensed banks, restricted license banks and deposit-taking companies with a license from the HKMA can legally carry out banking or deposit-taking activities in Hong Kong.
Furthermore, crypto companies are not allowed to compare their services to traditional banking services or encourage customers to open “banking accounts” or label their offerings as “deposits.” This warning follows another from the Hong Kong Securities and Futures Commission (SFC) aimed at the crypto trading platform JPEX. The SFC criticized JPEX for using terms like “crypto ‘deposits,’ ‘savings,’ or ‘earnings,’” which are not permitted under the SFC’s oversight framework. It also rebuked the platform for portraying itself as a licensed entity, although it had not applied for or received any such license.
The SFC has also previously warned the public about unlicensed crypto platforms that were involved in questionable activities. It cautioned that platforms claiming to have applied for licenses may not be in compliance with the legal and regulatory requirements of the new regime and misrepresenting a company as a licensed entity when it has not received authorization is an offense.
Overall, although Hong Kong has taken steps to become more open to crypto businesses, recent actions by the HKMA and SFC demonstrate that the authorities are still vigilant when it comes to regulating the crypto market. They are working to ensure the public is not misled by companies operating in the Hong Kong crypto space.
