The Hong Kong Monetary Authority (HKMA), has cautioned cryptocurrency companies against using the term “bank” unless they are officially authorized institutions. This directive is crucial in ensuring that customers are not led astray by false representations.
The HKMA has reminded cryptocurrency firms operating in Hong Kong that referring to themselves as “crypto banks” or “digital asset banks,” labeling funds as “deposits,” or promoting savings schemes promising low risk and high returns may all be in violation of Hong Kong’s banking regulations.
This cautionary statement coincides with the ongoing liquidity crisis at heavily promoted Hong Kong-based cryptocurrency exchange, JPEX. Following a warning from the Securities and Futures Commission (SFC) in Hong Kong, JPEX has suspended specific platform operations. The SFC highlighted the fact that JPEX was operating without a valid license in the country.
Hong Kong Monetary Authprity Regulatory Approach and Vitalik Buterin’s Concerns
Although mainland China has explicitly prohibited cryptocurrencies, Hong Kong, being a special administrative region, has adopted a distinct stance. It actively promotes collaboration between banks and cryptocurrency firms seeking to establish themselves in the region.
However, Ethereum co-founder Vitalik Buterin has voiced concerns regarding Hong Kong’s crypto-friendly approach. During his address at the Web3 Transitions Summit in Singapore, Buterin stressed the importance of cryptocurrency projects considering Hong Kong as their base.
Additionally, he pointed out that it’s crucial for them to have confidence not only in the current hospitable environment but also in the long-term stability of the region. This consideration is vital due to the potential for unforeseen regulatory, political, and other events that could impact the cryptocurrency industry.
In response, a member of the Hong Kong Legislative Council countered Buterin’s remarks, describing the country’s policies as “highly stable” and extending an invitation to Buterin to visit the city.
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