Hong Kong Cracks Down on Crypto Firms Claiming to Be Banks

Hong Kong's central bank has warned investors to be alert of crypto businesses that call themselves "banks," saying such companies are violating the region's banking laws. The financial watchdog said only licensed institutions are permitted to carry out deposit-taking businesses in the city.

The Hong Kong Monetary Authority (HKMA) said descriptions like "digital bank" and "crypto bank" could mislead people into believing that such businesses are authorized in the region and people could trust their money with them.

People can verify the authorization of an entity to conduct crypto business on the register of approved institutions on HKMA's website.

Last week, the Hong Kong Securities and Futures Commission (SFC) cautioned that potential applicants found breaching key rules might miss out on licenses for crypto retail trading. The market’s watchdog noticed a number of unlicensed cryptocurrency exchanges engaging in unnamed "improper practices" in the city.

As China continues its crackdown on cryptocurrencies, Hong Kong looks to bolster its position as a global hub of the crypto industry. It has opened its arms to crypto investments but at the same time has issued a number of guidelines for crypto businesses.

Authorities also encourage banks to work with crypto firms in the region. After Hong Kong introduced its new licensing regime on June 1, HashKey and OSL became the first two exchanges to get the approval to offer retail trading in the region.