Hong Kong regulator: Crypto firms cannot claim to be 'banks'

The Hong Kong Monetary Authority (HKMA) has warned crypto firms to avoid using the term “bank” unless they’re an authorized institution in order to avoid misleading customers. 

Hong Kong’s central bank reminded crypto companies that describing themselves using terms like “crypto bank” or “digital asset bank,” characterizing funds as “deposits,” or promoting savings plans with low risk and high return could all run afoul of Hong Kong’s banking ordinance. 

The warning’s timing may be related to the ongoing liquidity crisis at JPEX, a crypto exchange that was heavily marketed in Hong Kong. JPEX has halted some platform operations following a warning from a different Hong Kong regulatory body, the Securities and Futures Commission (SFC), that JPEX was operating without a license in the country. 

In Hong Kong, an uncertain future for crypto

Although mainland China has officially banned cryptocurrencies, Hong Kong as a special administrative region has diverged from China’s attitude, encouraging banks to play nice with crypto companies who want to set up shop in the country. 

Ethereum co-founder Vitalik Buterin recently expressed uncertainty towards Hong Kong’s crypto-friendliness. “If any crypto project wants to make Hong Kong their home, they would want to have some confidence — not just that it’s friendly now but that it will continue to be friendly years from now when all kinds of unknown, regulatory and political and other kinds of events are going to happen,” Buterin said at the Web3 Transitions Summit in Singapore.

A Hong Kong Legislative Council member later pushed back on Buterin’s comments, describing the country’s policies as “very stable” and inviting Buterin to visit the city.