HKMA warns against crypto firms misusing “bank” terminology, clarifying that only licensed banks can offer banking services in Hong Kong.
The Hong Kong Monetary Authority (HKMA) has issued a warning regarding the misuse of the term “bank” by overseas cryptocurrency firms. In a statement released today, the HKMA highlighted that two crypto companies had misrepresented themselves as banks while operating in Hong Kong. These firms used the term “bank” or referred to products like crypto cards as “bank cards.”
The HKMA warned that this could mislead consumers into believing these firms are licensed and regulated by the authority. Consequently, it cautioned the public to be aware of such misleading claims. The HKMA emphasized that only authorized institutions can use the term “bank” in Hong Kong. Therefore, consumers should be cautious when dealing with such firms.
The HKMA pointed out that only banks licensed by the authority, restricted license banks, and deposit-taking companies can legally engage in banking or deposit-taking business in Hong Kong. Any company that purports to be a bank or has the word ‘bank’ in its name contravenes the Banking Ordinance. This legislation aims to safeguard customers from abuses and scams by restricting banking services to legal and authorized entities in the region.
HKMA Cautions Public on Crypto Firms Offering “Banking” Services Without Regulation
The HKMA noted that one of the firms had used the term “bank” in advertisements, and another had described its crypto product as a “bank card.” The authority said these claims could give consumers the impression that the HKMA regulated the crypto firms. The HKMA pointed out that this could confuse consumers about the level of protection and security they might receive. As a result, it urged the public to exercise caution when dealing with these firms.
The HKMA clarified that overseas crypto firms are not automatically regulated by the authority, even if they hold a license. It emphasized that these firms must meet local regulations to be recognized in Hong Kong. By now, crypto companies are required to meet local regulations to be controlled in Hong Kong. Therefore, firms employing the term “bank” or providing what is usually called “banking services” are not necessarily within the ambit of the regulated banks in Hong Kong.
The HKMA’s warning should be a good reminder for consumers to be cautious when checking the authenticity of financial services. The public is advised to beware of the firms offering services in crypto. It is noted that some call themselves ‘banks’ or have products with the word ‘bank’ in their name. This move reflects Hong Kong ongoing commitment to ensuring transparency. Additionally, this significant step will maintain a secure financial environment as the cryptocurrency sector expands globally.
