The Hong Kong Monetary Authority has issued a warning to crypto firms regarding the misuse of the term “bank,” underscoring that this terminology is exclusively accessible to licensed institutions.
The Hong Kong Monetary Authority (HKMA) has issued a severe warning to cryptocurrency firms, advising them to avoid the exploitation of the term “bank” in their marketing and operations within Hong Kong.
This is in response to allegations that two crypto companies located overseas were fraudulently representing themselves as licensed banking institutions.
The HKMA underscored that such actions could potentially mislead the public and contravene the region’s Banking Ordinance, which strictly regulates the use of banking terminology.
In response to incidents involving two overseas crypto firms that operate in Hong Kong, the HKMA has issued an alert.
One of these organizations asserted that it was a “bank,” while another referred to one of its offerings as a “bank card.”
The HKMA has expressed concern that these representations may lead to consumers believing that these firms are regulated entities that are authorized to provide banking services in Hong Kong.
Institutions authorized by the HKMA, such as licensed banks, restricted license banks, and deposit-taking companies, are able to legally refer to their operations or products as “banks” under Hong Kong’s Banking Ordinance.
In Hong Kong, it is unlawful for any individual to use the term “bank” in the name or description of their business, or to falsely claim that they are a bank or are conducting banking business in Hong Kong, with the exception of licensed banks.
The use of this term without authorization is a criminal offense. The central bank emphasized that unlicensed crypto firms are not subject to its supervision and cautioned the public to meticulously verify the claims made by such entities.
The HKMA observed that the financial ecosystem of the region is at risk of compromise due to the misuse of banking terminology, which could expose consumers to substantial risks.
The increasing number of crypto firms entering the Hong Kong market as the city endeavors to establish itself as a prominent global crypto center has exacerbated this concern.
The central bank emphasized that the sole entities authorized to conduct banking or deposit-taking activities in the region are designated institutions.
Additionally, any organization that employs the term “bank” in its branding or marketing without the appropriate authorization is susceptible to legal repercussions.
In order to safeguard consumers, the HKMA directed the public to its Register of Authorized Institutions, a comprehensive online database that enables individuals to verify the credentials of entities that claim to offer banking services. It also urged individuals with concerns to contact its Public Enquiry Service hotline.
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