Hong Kong Regulators Caution Crypto Firms Against Misleading Terminology

The Hong Kong Monetary Authority (HKMA) has issued a caution to cryptocurrency firms, advising them against using the term "bank" unless they possess proper authorization to prevent potential customer confusion, reports The Block.

The central bank of Hong Kong has emphasized to cryptocurrency enterprises that referring to themselves as "crypto banks" or "digital asset banks," labeling funds as "deposits," or promoting savings schemes with promises of low risk and high returns could all be in violation of Hong Kong's banking regulations.

The timing of this warning might be connected to the ongoing liquidity crisis at JPEX, a cryptocurrency exchange that was actively promoted in Hong Kong. JPEX has suspended some of its platform operations following a warning from a different regulatory body in Hong Kong, the Securities and Futures Commission (SFC), which pointed out that JPEX was operating without a proper license in the country.

Despite mainland China's official ban on cryptocurrencies, Hong Kong, as a special administrative region, has adopted a different stance, encouraging banks to cooperate with cryptocurrency companies looking to establish a presence in the region.

Vitalik Buterin, the co-founder of Ethereum, recently expressed uncertainty regarding Hong Kong's cryptocurrency-friendly environment. He remarked, "If any cryptocurrency project wishes to make Hong Kong their home, they would need to have confidence not only in its current friendliness but also in its long-term friendliness, considering the various unknown regulatory, political, and other events that may occur," during the Web3 Transitions Summit in Singapore.

A member of the Hong Kong Legislative Council later challenged Buterin's remarks, describing the country's policies as "very stable" and extending an invitation to Buterin to visit the city.