Hong Kong Regulator Issues Warning Against Crypto Firms Posing as Banks

The Hong Kong Monetary Authority (HKMA) has expressed alarm over crypto businesses misrepresenting themselves as banks, highlighting that such acts contravene the region's Banking Ordinance. The HKMA is taking this action in order to safeguard the public from any misconceptions and hazards linked with these false descriptions.

False Descriptions Violate Banking Regulations

The HKMA has issued a severe warning to cryptocurrency businesses, asking them to avoid misleading practices such as presenting themselves as banks or advertising their offerings as “deposits.” According to the HKMA, these operations violate Hong Kong's Banking Ordinance, which is meant to regulate financial institutions and protect clients.

The HKMA highlighted its knowledge of crypto firms in a statement made on September 15, using words like “crypto asset banks” and “digital banks” to characterize their activities. Furthermore, the regulator warned crypto businesses from claiming to offer banking services or banking accounts, since such acts may persuade the public to assume they are dealing with reputable financial organizations.

The HKMA Does Not Regulate Cryptocurrency Firms

It should be noted that the HKMA does not supervise or regulate cryptocurrency enterprises. As a consequence, the authority lacks the resources to safeguard the security of monies handled by these businesses. The HKMA emphasized that any monies put with cryptocurrency businesses are not protected by the Hong Kong Deposit Protection Scheme, which generally protects deposits kept in conventional banks.

The HKMA advised people to consult the registry of approved institutions on its official website to check the validity of deposit-taking organizations. This record provides information on financial firms that have earned HKMA licenses to conduct banking or deposit-taking activities in Hong Kong.

In summary, the Hong Kong Monetary Authority is taking steps to prohibit cryptocurrency enterprises from misrepresenting themselves as banks and using deceptive descriptions that may mislead the public. The main purpose is to safeguard customers by making sure they understand the nature of the financial services they are using and the amount of regulatory monitoring in place. Individuals must take vigilance and confirm the legitimacy of deposit-taking organizations, particularly when dealing with cryptocurrency-related services in Hong Kong.