In an interesting development, the Hong Kong Monetary Authority (HKMA), the city’s Hong Kong regulator, has issued a stern warning to crypto firms. The regulatory body has cautioned them against using the term ‘bank’ unless they qualify as an authorized institution. This is to prevent potential deception of their customers.
A Violation of the Banking Ordinance?
The HKMA has expressed concern that crypto companies may mislead the public by referring to themselves as ‘crypto banks’ or ‘digital asset banks’. They further warn against characterizing funds as ‘deposits’ or promoting high-return, low-risk savings plans. Such actions could violate the banking ordinance of Hong Kong.
The timing of this warning is interesting, given the ongoing liquidity crisis at JPEX, a crypto exchange that had been extensively promoted in Hong Kong. Following a warning from another regulatory body, the Securities and Futures Commission (SFC), JPEX has suspended some of its operations due to unlicensed activity in the country.
The Uncertain Crypto Climate in Hong Kong
Despite the official ban on cryptocurrencies in mainland China, Hong Kong, a special administrative region, has taken a different stance. The city encourages its banks to cooperate with crypto companies looking to establish themselves there. However, the future of crypto in Hong Kong remains uncertain.
During the recent Web3 Transitions Summit in Singapore, Ethereum co-founder Vitalik Buterin expressed doubt about Hong Kong’s crypto-friendly stance. He voiced concerns about the city’s long-term commitment to being a crypto-friendly environment, given the unpredictable nature of regulatory and political events.
Hong Kong’s Response
A member of the Hong Kong Legislative Council refuted Buterin’s comments, asserting that Hong Kong’s policies are ‘very stable’. He also invited Buterin to visit the city to see for himself.
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