Hong Kong watchdog issues warning about foreign entities pretending to be crypto banks
The Hong Kong Monetary Authority (HKMA) has cautioned the public to remain vigilant against foreign crypto firms falsely presenting themselves as banks, according to a Nov. 15 notice.
The regulator revealed that some overseas crypto firms are portraying themselves as banks to gain the trust of Hong Kong users. Many of these entities operate without proper licenses and are not authorized to use the term bank in their branding or promotional materials.
The HKMA stressed that such actions could violate the Banking Ordinance, which governs the use of banking-related terms and activities in Hong Kong.
Violators
The alert pointed to two unnamed foreign crypto firms as offenders. One reportedly referred to itself as a bank, while the other described its product as a bank card. These representations, according to the HKMA, risk misleading the public into believing these entities are licensed banks under its supervision.
The financial authority clarified that only licensed banks, restricted license banks, and deposit-taking companies authorized by the HKMA are legally permitted to engage in banking or deposit-taking activities in Hong Kong.
HKMA stated that the Banking Ordinance prohibits unauthorized individuals or organizations from using bank in their names or descriptions. It also forbids misleading representations that suggest an entity is a bank or conducts banking business in Hong Kong.
The regulator also emphasized that crypto firms not recognized as authorized institutions in Hong Kong are outside its regulatory scope.
It added that foreign crypto firms using the term bank or branding themselves as crypto banks licensed in other jurisdictions do not necessarily hold a banking license in Hong Kong. Similarly, products or services labeled with bank may not originate from licensed banks in the region.
The warning comes amid Hong Kongs recent decision to expand the list of licensed crypto exchanges by the end of the year.
Despite its reputation as a key Asian crypto hub, Hong Kong enforces a rigorous licensing process. So far, only three crypto exchanges OSL Exchange, HashKey Exchange, and HKVAX have secured licenses.
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Text source: CryptoSlate
