Hong Kong Monetary Authority Warns Against Crypto Firms Posing as ‘Banks’

According to a release published by the Hong Kong Monetary Authority (HKMA), members of the public should be aware of crypto firms describing themselves as “banks” or labeling their products as “deposits”.

HKMA believes said companies to be in violation of Hong Kong’s Banking Ordinance, which prohibits unlicensed companies from using the word ‘bank’ in the “name or description under which they carry on business, or make any representation that they are a bank or carrying on banking business in Hong Kong”, describing this and similar actions as an “offence”.

“The HKMA is aware of some crypto firms describing themselves using terms such as “crypto bank”, “crypto asset bank”, “digital asset bank”, “digital bank” or “digital trading bank”, or claiming to offer “banking services” or “banking accounts”.  Some crypto firms also use the word “deposits” to describe funds placed with them by clients, or promoting “savings plans” as “low risk” with “high return”.  These descriptions may mislead members of the public into believing that those crypto firms are banks authorized in Hong Kong, to which they can entrust their savings.”

Hong Kong authorities have emerged in cryptocurrency headlines several times in recent days, with the jurisdiction’s Securities and Futures Commission (SFC) issuing an alternative warning against the JPEX cryptocurrency exchange - an exchange which has undertaken further suspicious activity since the warning was issued.

Hong Kong regulators appear to be taking a renewed approach to protecting consumers interests, with Hong Kong being described as the most Crypto-Ready nation in a recent report.

“The HKMA wishes to remind members of the public that crypto firms which are not banks in Hong Kong are not supervised by the HKMA and funds placed with them are not protected by the Hong Kong Deposit Protection Scheme” warns the release.