The Hong Kong Monetary Authority (HKMA) has issued a strict warning to the public regarding cryptocurrency firms that falsely present themselves as “banks” and describe their offerings as “deposits.” The HKMA highlights that such practices may violate the Banking Ordinance and could mislead individuals seeking financial services.
The HKMA highlighted that several cryptocurrency firms have adopted names such as “crypto bank,” “crypto asset bank,” “digital asset bank,” “digital bank,” or “digital trading bank.” They have also claimed to provide “banking services” or offer “banking accounts.” Additionally, some of these companies promote their services as “low risk” with “high returns,” using the term “deposits” to describe funds authorized to them by clients. These misleading descriptions can give the impression that these crypto firms are authorized banks in Hong Kong, where individuals can safely place their savings.
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Under the Banking Ordinance, only licensed banks, restricted license banks, and deposit-taking companies (referred to as authorized institutions) that have obtained licenses from the HKMA are permitted to engage in banking or deposit-taking activities in Hong Kong. The use of the term “bank” in business names or descriptions, or any representation of conducting banking business in Hong Kong, is strictly regulated and restricted to authorized institutions.
The public needs to be aware that cryptocurrency firms that are not recognized as banks in Hong Kong do not fall under the supervision of the HKMA. Consequently, funds assigned to them are not protected by the Hong Kong Deposit Protection Scheme.
To ensure the legitimacy of any entity claiming to be a bank or soliciting deposits in Hong Kong, the HKMA advises the public to consult the register of authorized institutions on their official website.
The HKMA’s advisory highlights the importance of due diligence and vigilance when engaging with cryptocurrency-related businesses. Individuals are urged to verify the credentials of financial institutions and carefully consider the associated risks before making any financial transactions.
Apart from this, in a report by Todayq News on June 15, 2023, the Hong Kong Monetary Authority (HKMA) pressured major banks such as HSBC and Standard Chartered to accept crypto exchanges as clients. In a meeting held in May, the HKMA encouraged the banks not to be afraid. However, there was resistance from senior executives at traditional banks who viewed it as harmful to Hong Kong’s pro-crypto approach.
