November 20, 2024
By Anjali Kochhar
The Hong Kong Monetary Authority (HKMA) has issued a warning about foreign cryptocurrency firms falsely presenting themselves as banks to gain trust among Hong Kong users. In a notice released on November 15, the HKMA revealed that these firms are using banking terms in their names and promotional materials, a practice that is not only misleading but also potentially illegal under Hong Kong’s Banking Ordinance. The ordinance strictly regulates the use of terms like “bank” and prohibits any unauthorised entity from suggesting that it offers banking services or is licensed under Hong Kong law.
The regulator pointed to two specific cases involving unnamed foreign crypto firms. One firm allegedly described itself as a bank, while another referred to its product as a “bank card.” These representations could mislead consumers into believing the firms are authorised and regulated banks in Hong Kong, which they are not. The HKMA clarified that only licensed banks, restricted license banks, and deposit-taking companies it authorises can legally provide banking or deposit-taking services in the region.
The notice also highlighted that foreign crypto firms branding themselves as “crypto banks” in other jurisdictions do not necessarily hold a valid banking license in Hong Kong. Financial products or services labeled with banking terms, even if legitimate elsewhere, may not be regulated or recognised in Hong Kong. The HKMA warned consumers to remain vigilant and ensure they verify the credentials of any financial service provider, especially in the rapidly evolving cryptocurrency market.
This alert comes as Hong Kong continues to refine its regulatory framework for the cryptocurrency sector. Despite being a leading crypto hub in Asia, the city enforces a rigorous licensing process for exchanges and related businesses to ensure transparency and protect investors. Currently, only three crypto exchanges—OSL Exchange, HashKey Exchange, and HKVAX—have secured licenses to operate under Hong Kong’s stringent financial regulations.
The HKMA’s warning underscores the potential risks associated with unregulated crypto firms and their practices. Consumers are advised to exercise caution, avoid entities misusing banking terminology, and rely only on licensed financial institutions. By addressing these concerns, the HKMA aims to protect Hong Kong residents and reinforce trust in its financial system while maintaining its status as a global financial center.
These actions highlight the regulator’s proactive approach to ensuring that the local financial ecosystem remains secure and free from misleading practices.
About the Author
Anjali Kochhar is a journalist specializing in cryptocurrency and blockchain news in India and globally. With over three years of media experience, she focuses on uncovering stories that go beyond the surface. An avid reader, she enjoys writing on diverse topics.
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