The Hong Kong Monetary Authority has warned the public about crypto businesses that claim to be banks and use banking terms in marketing material. The central bank warns these firms may be breaching the Banking Ordinance.
Striving to position itself as a worldwide center for cryptocurrency, Hong Kong has been making extensive efforts, ranging from attracting mainland China’s crypto companies to proposing the idea of trialing a digital dollar in its mortgage sector.
HK Monetary Authority Says Customers Can Misconstrue Terms
The HKMA highlighted that crypto companies are using terms including “crypto asset bank,” “digital asset bank,” “digital bank,” “banking services,” or “banking accounts,” that customers can misconstrue. According to Section 97 of the Banking Ordinance, only licensed banks, restricted license banks, and deposit-taking companies can legally use the term “bank.”
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Crypto Businesses Offer Outsized Returns Like Celsius
The offending businesses market returns that dwarf traditional bank accounts, making them attractive to the unsuspecting public. The collapse of crypto lender Celsius started with the company offering up to 18% returns with no apparent downside.
Its founder, Alex Mashinsky, styled himself as a type of Robinhood swooping in to save the public from banks. However, prosecutors allege he lied to the public about the company’s risk management and the business’s health.
Celsius filed for bankruptcy in July last year.
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Author: David Thomas
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