The Hong Kong Monetary Authority (HKMA) has highlighted that foreign cryptocurrency firms are misusing the term “bank.” The HKMA noted that some crypto firms have been offering their services and using the word “bank” in their products. Local regulators are intensifying the fight against fraud as the region works to establish itself as a global crypto hub.
Unlicensed Firms in Hong Kong.
On November 15, the central bank confirmed that these companies are not licensed banks in Hong Kong. The HKMA emphasized that such practices violate the Banking Ordinance and mislead consumers into thinking the firms are regulated and authorized in the region.
Alert: Please be cautious about crypto firms which may have misused the word “bank”. Certain overseas crypto firms, in recent events in HK, were reported to have made the representation that the firm was a “bank” or offered card product as “bank card” on the firm’s website. pic.twitter.com/Va5ebhhbTI
— HKMA 香港金融管理局 (@hkmagovhk) November 15, 2024
The central bank was alarmed after two offshore-based virtual banks operated in Hong Kong. One company pretended to be a bank, while the other called its product a “bank card.” The HKMA has not disclosed the names of the companies in question but warned that such actions are unlawful and have legal consequences.
Authorized Institutions Only
The HKMA indicates that only authorized institutions can provide banking services in Hong Kong. These include licensed banks, restricted license banks, and deposit-taking companies. The central bank explained that using the term “bank” without appropriate approval is prohibited under the Banking Ordinance. HKMA stated:
Other than licensed banks in Hong Kong, it is an offense for any person to use the word ‘bank’ in the name or description under which the person carries on business or makes any representation that the person is a bank or is carrying on banking business in Hong Kong.
The HKMA reiterated that companies engaging in virtual banking not approved by the HKMA are unregulated. This means consumers cannot expect the same level of protection as those available to consumers with licensed banks. The HKMA advised the public to be careful and to check whether a firm is licensed before using its services.
Hong Kong Enhances OTC Crypto Regulation and OversightThe central bank’s warning comes as the crypto industry grows and more companies seek to enter the region. The HKMA continues to focus on consumer protection and the soundness of Hong Kong’s financial system.
