The region’s deposit protection plan does not apply to deposits made at “crypto banks” that are not authorized, according to the HKMA.
The central bank of the Special Administrative Region of Hong Kong, the Hong Kong Monetary Authority (HKMA), has issued a warning to users that cryptocurrency businesses that pose as banks and use terms associated with banks may be breaking local banking regulations.
According to a news release from the HKMA, certain banking terms may mislead the public into thinking that cryptocurrency businesses are respectable banks in Hong Kong. However, the central bank emphasized that only authorized institutions are permitted to conduct banking or deposit-taking services in Hong Kong in accordance with the region’s banking legislation.
The central bank warned the public that firms describing themselves with words like “crypto bank,” “digital asset bank,” and “crypto asset bank” or claiming to be offering banking services or banking accounts may be breaking the law.
According to the HKMA, other than authorized institutions, it’s unlawful for persons or businesses to use the word “bank” in the names or descriptions of their companies. In addition, facilitating the taking of deposits without the proper license is also a violation of the law.
The HKMA reminded the public that the central bank does not oversee cryptocurrency companies that are not banks. This indicates that the so-called “crypto banks” deposits are not covered by the region’s deposit protection program.
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