HKMA Warns Against Misuse of 'Bank' by Crypto Firms in Hong Kong
Iris Coleman Nov 15, 2024 10:46
The Hong Kong Monetary Authority cautions the public about crypto firms misrepresenting themselves as banks, potentially violating the Banking Ordinance.
The Hong Kong Monetary Authority (HKMA) has issued a cautionary notice to the public regarding the misrepresentation of certain overseas cryptocurrency firms as banks within Hong Kong. These firms have been found using the term 'bank' inappropriately in their product descriptions, potentially misleading consumers, according to the Hong Kong Monetary Authority.
Crypto Firms Under Scrutiny
The HKMA's alert highlights instances where overseas crypto companies, not licensed as banks in Hong Kong, have misrepresented themselves during activities in the region. One firm allegedly claimed to be a 'bank,' while another described its card product as a 'bank card' on its website. These actions raise concerns about consumer confusion regarding these firms' regulatory status and the nature of their services.
Banking Ordinance Violations
Under Hong Kong's Banking Ordinance, only authorized institutions, such as licensed banks and deposit-taking companies, can legally conduct banking or deposit-taking activities. It is a violation for entities other than licensed banks to use the word 'bank' in their business names or descriptions, or to suggest they engage in banking activities without proper authorization.
Public Advisory
The HKMA advises the public that crypto firms not recognized as authorized institutions in Hong Kong are not under its supervision. Furthermore, overseas firms with the word 'bank' in their names, or those claiming licensing elsewhere, are not necessarily licensed banks in Hong Kong. The HKMA encourages individuals to verify the status of financial institutions through its online register of authorized institutions.
Regulatory Framework
In response to the increasing intersection of traditional finance and cryptocurrency, the HKMA underscores the importance of adhering to legal frameworks to protect consumers and ensure market integrity. This warning serves as a reminder for consumers to exercise due diligence and verify the legitimacy of financial services providers.
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