Hong Kong Monetary Authority: Be cautious of virtual asset entities claiming to be "banks"! Violation of Banking Ordinance

With the recent escalation of the JPEX fraud incident, the Hong Kong Monetary Authority has issued a public warning urging the public to be cautious of cryptocurrency institutions claiming to be "banks" and offering "deposit" services.

Hong Kong Monetary Authority: Beware of Cryptocurrency Institutions Claiming to be "Banks" and Offering "Deposit" Services

According to the announcement released by the Hong Kong Monetary Authority (HKMA), the public is advised to be cautious of cryptocurrency institutions that describe themselves as "crypto banks," "virtual asset banks," or "digital asset banks" with the word "bank" in their names. These institutions may claim to provide "banking services" or "bank accounts," use the term "deposit" to describe customers' funds held with the institution, and promote "savings plans" as "low risk" and "high return."

The HKMA stated that such claims are misleading and may lead the public to believe that these institutions are government-approved and safe for asset custody.

Cryptocurrency Institutions Claiming to be Banks Violate the Banking Ordinance

The HKMA also mentioned that under the Banking Ordinance, only licensed banks issued with a banking license by the HKMA, restricted license banks, and deposit-taking companies are permitted to conduct banking or deposit-taking activities in Hong Kong.

Therefore, institutions claiming to be banks and engaging in banking activities are operating illegally, and they are also prohibited from conducting deposit-taking activities in Hong Kong or soliciting deposits from the public.

Additionally, as these unlicensed cryptocurrency institutions are not under the supervision of the HKMA, assets held with them are not protected by the Hong Kong Deposit Protection Scheme.

If there are any doubts about any institution, the public can refer to the HKMA's list of approved institutions on the HKMA website.