Crypto Firms Posing As Banks Face Scrutiny From Hong Kong Regulator

The Hong Kong Monetary Authority (HKMA) has warned the public about two foreign-based crypto companies allegedly misrepresenting themselves as banks. The firms were found to have used the term “bank” when describing their products and services, potentially misleading consumers.

HKMA Cracks Down On Crypto Firms Posing As Banks

The HKMA, which also serves as Hong Kong’s central bank, alerted the public today to be wary of two digital asset firms accused of falsely portraying themselves as banks. According to the regulator, such misrepresentation may breach Hong Kong’s Banking Ordinance, which governs the region’s banking sector.

For the uninitiated, the Banking Ordinance is the primary legislation regulating banking activities in Hong Kong. It mandates licensing, supervision, and oversight of banking operations while prohibiting unauthorized entities from presenting themselves as banks or offering banking services.

In its statement, the HKMA revealed that one of the firms claimed to be a bank, while the other advertised a card product on its website as a “bank card.” Such words, the regulator noted, could mislead consumers into believing the firms were operating under HKMA’s supervision. The announcement stated:

Other than licensed banks in Hong Kong, it is an offence 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.

While the regulator did not disclose the names of the two entities, it emphasized that crypto firms claiming licenses in other jurisdictions are not automatically recognized as licensed banks in Hong Kong.

Despite Hong Kong’s ambition to establish itself as a global hub for cryptocurrency through favorable regulations, the region’s authorities are actively monitoring illegal activities linked to digital assets.