Hong Kong’s HKMA Warns Against Overseas Crypto Firms Posing as Banks

The Hong Kong Monetary Authority (HKMA) has issued a public warning against overseas cryptocurrency firms that falsely claim to be licensed banks, urging caution as such claims may be in violation of local banking laws. In a press release issued on November 15, the HKMA cautioned that some crypto firms, operating outside of Hong Kong, have been using the term “bank” in their product descriptions or marketing materials, potentially misleading consumers.

Misleading Claims by Crypto Firms

The regulator specifically pointed out two overseas crypto firms that recently conducted activities in Hong Kong. One of these firms referred to itself as a “bank,” while another described its product as a “bank card” on its official website. The HKMA expressed concern that such representations could mislead consumers into believing these firms were licensed by the authority and subject to its supervision.

Hong Kong Banking Laws

Under Hong Kong’s Banking Ordinance, only licensed banks, restricted license banks, and deposit-taking companies (collectively known as “authorized institutions”) are legally permitted to carry out banking services in the city. The use of the term “bank” by entities not falling under these authorized institutions is a clear violation of Hong Kong’s banking laws, according to the HKMA.

A Call for Public Awareness

The HKMA reminded the public that crypto firms, even those calling themselves “crypto banks” or using the term “bank” in their branding, may not be licensed to operate in Hong Kong. It stressed that such firms and their associated products should not be assumed to be supervised by the HKMA or fall under local regulations.

This warning comes at a time when the cryptocurrency industry is growing rapidly and attracting increasing attention from both regulators and consumers. The HKMA’s move underscores its commitment to maintaining regulatory clarity and consumer protection in the face of emerging digital financial services.

Regulatory Oversight and Consumer Protection

The HKMA also advised consumers to carefully review the credentials of any financial services provider, particularly in the rapidly evolving crypto space, and to be wary of firms that may attempt to exploit the “bank” label for marketing purposes. With the expansion of digital assets and the rise of “crypto banks,” regulators globally are stepping up efforts to ensure that consumer protections are in place, particularly in jurisdictions like Hong Kong, which is a key financial hub in Asia.

This warning from the HKMA serves as a timely reminder to the public about the importance of verifying the legitimacy of financial services providers before engaging with them, especially as the regulatory landscape for cryptocurrencies continues to evolve.