Hong Kong’s financial regulatory authority, the Hong Kong Monetary Authority (HKMA), has issued a public advisory warning against crypto companies falsely presenting themselves as banks or using the term “bank” for their products. The HKMA emphasizes that such misrepresentations may violate the Banking Ordinance in Hong Kong.
There have been instances where crypto firms have labeled themselves as “crypto banks,” “crypto asset banks,” and “digital trading banks,” according to the HKMA. These firms have also been promoting “savings plans” with claims of low risk and high returns, which could mislead the public into thinking these are authorized banks in Hong Kong where they can securely deposit their funds.
The HKMA clarifies that only licensed banks, restricted license banks, and deposit-taking companies, collectively known as “authorized institutions” that have been granted a license by the HKMA, are allowed to conduct banking or deposit-taking activities in Hong Kong.
It is considered an offense for any other entity to use the term “bank” in their business name or suggest that they offer banking services in Hong Kong, including entities that accept deposits or invite the public to make deposits.
Crypto companies that are not recognized as banks in Hong Kong are not under the supervision of the HKMA. As a result, funds placed with these firms are not protected by the Hong Kong Deposit Protection Scheme.
The HKMA urges the public to exercise caution and consult the register of authorized institutions on their website if there are doubts about a company claiming to be a bank or soliciting deposits in Hong Kong. In case of persisting doubts, individuals can contact the HKMA’s Public Enquiry Service hotline.
The Banking Ordinance in Hong Kong states that only a bank or a central bank can use the term “bank” or its derivatives in its business name without the written consent of the HKMA. Additionally, only entities with a valid banking license or recognized as an authorized institution can engage in banking or deposit-taking activities in Hong Kong.
Exceptions to this rule include authorized institutions issuing advertisements to the public to make a deposit, as permitted under section 92 of the Banking Ordinance.
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