Hong Kong’s Financial Watchdog Warns Against Disguised Crypto Firms

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Watchdog Warns Against Crypto Firms
  • The HKMA releases warnings against crypto firms that title themselves banks and their products as deposits.
  • The regulators asserted that under the Banking Ordinance, the operations of unlicensed firms are offensive.
  • Hong Kong’s SFC recently warned against JPEX, claiming that the crypto firm is unauthorized.

The Hong Kong Monetary Authority (HKMA) recently released a warning against the crypto-related companies that identify themselves as “banks” and their products as “deposits”. The financial watchdog further suggested the public be cautious in their dealings with such institutions.

HKMA took the public attention to the authority’s recent findings about some crypto firms labeling themselves as a “crypto bank”, “digital asset bank”, “crypto asset bank”, “digital bank” or “digital trading bank”.  Claiming that these platforms violate Hong Kong’s Banking Ordinance, the regulators stated, “These descriptions may mislead members of the public into believing that those crypto firms are banks authorized in Hong Kong, to which they can entrust their savings”.

As per the press release, only authorized institutions, that have attained a license from the HKMA, would be legally permitted to engage in banking services in Hong Kong, under the Banking Ordnance. Reprimanding that the unauthorized operations of any institution are illegal and punishable, the regulators cited,

“Other than authorized institutions, it is an offense for any person to use the word “bank” in the name or description under which they carry on business, or make any representation that they are a bank or carrying on banking business in Hong Kong (Note 1); and it is also an offense for any person, to carry on a business of taking deposits in Hong Kong (Note 2) or invite members of the public to make any deposit (Note 3).”

The financial regulator’s warnings followed the Securities and Futures Commission’s (SFC) caution against the crypto exchange JPEX, proclaiming that the firm is unauthorized. The agency also provided insights into the platform’s various suspicious practices, including the false descriptions published on its official website as a licensed entity.