Crypto Firms Lie to Public, Pose as Banks
The Hong Kong Monetary Authority has levied a serious warning against the misleading of the public by overseas cryptocurrency firms masquerading themselves as licensed banks. According to a news release dated Nov. 15, the regulator warns such misrepresentations may not only deceive consumers but also breach Hong Kong’s strict banking laws.
The HKMA specifically cited the cases of two crypto firms operating in Hong Kong that referred to themselves as a “bank.” One of the firms labeled itself as a “bank,” while the other advertised its card product as a “bank card.” Such claims could mislead consumers into thinking the firms were licensed banks under the regulator’s purview.
The authority emphasized that such misuse of the term “bank” involves real risks, as customers may think they are dealing with an institution subject to regulation, whereas in fact the firms concerned lack licenses and supervision.
Violations of Hong Kong’s Banking Ordinance
The use of the term “bank” is legally restricted in Hong Kong under the city’s Banking Ordinance. Only authorized institutions, which include licensed banks, restricted license banks and deposit-taking companies are allowed to carry that designation or conduct banking business. The HKMA warned that those who fall outside these categories and use the term “bank” could face legal consequences.
These are, therefore, legislatively required restrictions so that consumers can have confidence in financial institutions operating in Hong Kong. Misleading claims contravene the relevant provisions and dent public confidence in the financial system for that matter.
HKMA also emphasized that most of the so-called “crypto banks” do not have any authorization to conduct banking business in Hong Kong, irrespective of branding or claims. Consumers are advised to treat such marketing with skepticism.
Public Awareness and Regulatory Compliance
HKMA called on the public to exercise precautions when dealing with financial services involving crypto firms. It reminded the public that any product or service in the territory representing itself as a “bank” should be duly compliant with local regulations and that consumers should check whether such firms were licensed to operate.
This warning, therefore, acts as a grim reminder of the ever-heightening need for regulatory vigilance as crypto firms extend their reach. The HKMA’s move underlined its commitment to the protection of consumers and maintenance of integrity in Hong Kong’s finances.
