In a significant development, the Hong Kong Monetary Authority (HKMA) has instructed crypto companies operating within its jurisdiction to refrain from using terminology that could mislead the public by associating them with conventional banks. The regulatory body emphasized that, unless recognized as an authorized institution, these firms should avoid terms such as “crypto bank” or “digital asset bank”. This strict approach is seen as an effort to prevent these entities from portraying funds as “deposits” or offering savings schemes promising low risks and high returns, which could potentially violate Hong Kong’s banking ordinance.
The JPEX Crisis and Regulatory Oversight
The timing of this warning seems to coincide with the current liquidity crisis engulfing JPEX, a crypto exchange widely promoted in Hong Kong. Recent developments have seen the platform cease several of its operations, following a notification from another governing entity, the Securities and Futures Commission (SFC). The SFC has reported that JPEX was operating without the required license in the nation, intensifying the scrutiny of crypto companies and their adherence to local regulatory frameworks.
Uncertain Ground for the Future of Cryptocurrency in Hong Kong
Despite the strict stance of Mainland China against cryptocurrencies, Hong Kong has demonstrated a more receptive approach, fostering a conducive environment for crypto companies to establish their presence in the territory. However, the current scenario indicates an uncertain trajectory regarding Hong Kong’s crypto-friendly attitude.
Ethereum co-founder Vitalik Buterin echoed this sentiment, expressing concerns about the long-term viability of establishing crypto projects in Hong Kong. At the Web3 Transitions Summit held in Singapore, he voiced worries about fluctuating regulatory and political landscapes that could impact the crypto-friendly aura in the years to come. In contrast, a member of the Hong Kong Legislative Council countered Buterin’s position, claiming the country’s policy stability and inviting him to personally witness the reality on the ground.