The Hong Kong Monetary Authority (HKMA) has issued a warning about foreign crypto firms pretending to be banks, misleading consumers. The regulator stated that some overseas entities are falsely presenting themselves as banks to gain the trust of Hong Kong users, operating without proper licenses and authorization to use the term “bank” in their branding.
This action violates the Banking Ordinance in Hong Kong, which governs the use of banking-related terms and activities in the region. The HKMA highlighted two unnamed foreign crypto firms as offenders, with one claiming to be a bank and the other promoting its product as a bank card. These misrepresentations risk deceiving the public into believing these entities are licensed banks under the supervision of the HKMA.
According to the financial authority, only licensed banks, restricted license banks, and authorized deposit-taking companies are legally permitted to engage in banking or deposit-taking activities in Hong Kong. Unauthorized individuals or organizations are prohibited from using the term “bank” in their names or descriptions, as well as making misleading representations suggesting they are banks conducting business in Hong Kong.
It is important to note that crypto firms not recognized as authorized institutions in Hong Kong fall outside the regulatory scope of the HKMA. Foreign entities using the term “bank” or branding themselves as “crypto banks” licensed in other jurisdictions may not hold a banking license in Hong Kong, and products labeled with “bank” may not originate from licensed banks in the region.
This warning from the HKMA coincides with Hong Kong’s plans to expand the list of licensed crypto exchanges by the end of the year. Despite being a prominent Asian crypto hub, Hong Kong maintains a stringent licensing process, with only three crypto exchanges – OSL Exchange, HashKey Exchange, and HKVAX – currently holding licenses.
It is crucial for consumers in Hong Kong to remain vigilant and verify the legitimacy of any crypto firms claiming to be banks or offering banking services. By being aware of the regulatory requirements and authorized entities in the region, individuals can protect themselves from potential scams and fraudulent activities in the crypto space.