HKMA Issues Warning on Crypto Firms Falsely Calling Themselves Banks
HKMA– The Hong Kong Monetary Authority has issued a stern warning to the public regarding overseas crypto companies that are misrepresenting themselves as banks. In a statement on November 15, the HKMA cautioned that these companies are using the term bank to gain consumer trust, despite not being licensed banks in Hong Kong. Such actions, the central bank stressed, may violate local banking laws.
According to the HKMA, some cryptocurrency firms are falsely presenting themselves as banks or describing their services as banking products, which could mislead consumers into believing they are dealing with a licensed entity in Hong Kong. Such acts may constitute a contravention of the Banking Ordinance, the HKMA noted in its warning.
Two Overseas Crypto Firms Under Investigation
The The Hong Kong Monetary Authority’s warning comes in response to two overseas-based crypto companies operating in Hong Kong that have made misleading claims about their banking status. One of the companies falsely represented itself as a bank, while the other referred to its product as a bank card. The HKMA expressed concerns that these misrepresentations could deceive consumers into thinking that these services are provided by licensed banks in Hong Kong, under the supervision of the HKMA.
The central bank is particularly concerned that such misleading practices might confuse the public and lead to an erosion of trust in legitimate financial institutions in the region.
Unauthorized Use of the Word “Bank” is Illegal in Hong Kong
The HKMA clarified that only authorized institutions, such as licensed banks, restricted license banks, and deposit-taking companies, are allowed to provide banking services in Hong Kong. Under the Banking Ordinance, it is illegal for any entity, including crypto companies, to use the term bank unless they are a licensed institution.
The Hong Kong Monetary Authority explained: 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.
This means that crypto companies without the proper authorization are not subject to HKMA oversight and are not permitted to use the term “bank” to describe their services or products. The central bank warned that violators could face legal consequences for misleading the public and engaging in unlawful practices.
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