Hong Kong issues warning against “Crypto Bank” like services

The Central Bank of Hong Kong warned citizens & suggested to remain away from those crypto companies that claim to be a Crypto bank. 

Hong Kong is a special administrative region of China. In June of this year, Hong Kong issued a new set of laws for the crypto sector, so that retail investors can participate in crypto investment activities as well as crypto companies can easily evolve in Hong Kong under proper & clear rules, unlike other jurisdictions.

On 16 Sep 2023, Hong Kong’s central bank issued a set of warnings against all those crypto companies which claimed that they are “Crypto banks, Digital Assets Bank, or provide Crypto banking services or digital trading banks

Issued warning, noted that some crypto companies were found to be using “deposits” for the funds entrusted to them by clients. According to the central bank, these companies are violating Hong Kong’s banking laws.

“Under the Banking Ordinance, only licensed banks, restricted license banks, and deposit-taking companies (collectively known as “authorized institutions”), which have been granted a license by the HKMA can carry out banking or deposit-taking business in Hong Kong.” the announcement read.

The Central Bank further suggested citizens not blindly use such platforms because such crypto firms violate laws and the customers are not protected by the Hong Kong Deposit Protection Scheme. 

To remain away from such crypto firms, the Hong Kong central bank suggested citizens check the authenticity of the company’s services directly by visiting the HKMA’s official website, to know whether they are registered or licensed or not. 

Currently, more than 150 companies are in queue to get a crypto regime, to provide crypto services in Hong Kong as well as globally. Because of the inflow of crypto companies in China’s special administrative region, the employment rate surged rapidly. Also, Hong Kong’s crypto adoption policy is attracting huge numbers of the population belonging to mainland China, where crypto is fully banned. 

Just a month ago, a report came into light that claimed that many mainland Chinese people visit Hong Kong to trade Crypto assets with physical store owners in Hong Kong, which is unethical. 

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