The HKMA warns that misleading use of the word ‘bank’ by cryptocurrency companies not only deceives consumers but also violates Hong Kong’s banking ordinance.
Highlights
- The Hong Kong Monetary Authority (HKMA) has warned two overseas cryptocurrency companies against misrepresenting themselves as licensed banks.
- Legal action could be taken against crypto companies that use the word “bank” in their names in violation of banking bylaws.
- Hong Kong’s cryptocurrency regulations, introduced in June 2023, aim to ensure consumer protection and promote industry trust.
On November 15, 2024, the Hong Kong Monetary Authority (HKMA), the region’s de facto central bank, issued a stern warning to two overseas cryptocurrency companies posing as banks. The move comes as local authorities step up efforts to protect consumers and ensure transparency in Hong Kong’s fast-growing cryptocurrency market.
HKMA cracks down on misleading cryptocurrency companies
The Hong Kong Monetary Authority (HKMA) said in a statement that one cryptocurrency company misrepresented itself as a bank and another misrepresented its cards as ‘bank cards’ on its website. These deceptions have raised serious concerns about consumers being misled into believing that these companies operate as licensed banks under HKMA regulations.
“The HKMA is concerned that such claims by these companies may lead consumers to believe that they are Hong Kong-licensed banks and are supervised by the HKMA and that such products and services are provided by Hong Kong-licensed banks. (…) Such actions may constitute a violation of banking regulations,” the HKMA said.
The Banking Ordinance clearly defines which institutions are permitted to operate as banks in Hong Kong. Only institutions authorized by the HKMA, such as licensed banks, limited licensed banks and depository companies, may carry out banking and deposit activities. The law also prohibits businesses from using the term “bank” in their name or services unless they hold the appropriate licenses.
The HKMA also said that the use of “banks” by cryptocurrency companies not only misleads the public but also constitutes a breach of regulations. Legal action may be taken against these companies and you may face consequences if you misrepresent yourself as a licensed financial institution in Hong Kong.
Hong Kong’s cryptocurrency regulation strengthens market confidence
Hong Kong has strategically positioned itself as a prominent global hub for cryptocurrencies, with increasing momentum in recent years. In June 2023, the city introduced a licensing regime designed to regulate cryptocurrency trading platforms while promoting innovation within the digital asset sector. This system requires licensed cryptocurrency companies to follow strict guidelines to ensure consumer protection.
The recent crackdown on two cryptocurrency companies reflects broader efforts by Hong Kong’s monetary authorities to tighten controls over companies operating in the cryptocurrency market. By combating fraud and deception, authorities play a pivotal role in maintaining trust within the financial system.
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With over 3 years of cryptocurrency writing experience, Bena is committed to making cryptocurrency, blockchain, Web3, and fintech accessible to everyone. Aside from cryptocurrency, Bena enjoys reading books in her free time.
