The Hong Kong Monetary Authority (HKMA) has warned the public against two foreign-based crypto companies allegedly misrepresent themselves as banks. Companies were found to have used the term “bank” to describe their products and services, potentially misleading consumers.
HKMA cracks down on crypto companies posing as banks
The HKMA, which also serves as Hong Kong’s central bank, today alerted the public to be wary of two digital asset companies accused of misrepresenting themselves as banks. According to the regulator, such a misrepresentation could contravene the Hong Kong Banking Ordinance, which governs the region’s banking sector.
For the uninitiated, the Banking Ordinance is the main legislation regulating banking activities in Hong Kong. It requires licensing, supervision and monitoring of banking operations while prohibiting unauthorized entities from holding themselves out as banks or offering banking services.
In its statement, the HKMA revealed that one of the companies claimed to be a bank, while the other advertised a card product on its website as a “bank card”. Such comments, the regulator noted, could mislead consumers into believing that the companies were operating under the supervision of the HKMA. The announcement stated:
Except for banks licensed in Hong Kong, any person using the word “bank” in the name or description under which it carries on business, or making any representation that it is a bank or carries on banking business, constitutes a offense. business in Hong Kong.
Although the regulator did not disclose the names of the two entities, it stressed that crypto companies claiming licenses in other jurisdictions are not automatically recognized as licensed banks in Hong Kong.
Despite Hong Kong’s ambition to establish itself as a global cryptocurrency hub through favorable regulation, authorities in the region are actively monitoring illegal activities related to digital assets.
Hong Kong wants to become a global crypto hub
Hong Kong’s pro-crypto stance stands in stark contrast to neighboring China, where a blanket ban on cryptocurrency-related activities remains. However, recent reports suggest that China may soften its approach towards digital assets following Donald Trump’s victory in the 2024 US presidential election.
Hong Kong has become one of the most progressive crypto regions in the world, especially in Asia. According to a recent report from Chainalysis, Hong Kong is ranked as the top region in East Asia for crypto adoption.
To improve its crypto ecosystem, the Hong Kong Securities and Futures Commission (HKSFC) approved multiple Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) earlier this year. The move highlighted the region’s confidence in the potential of digital assets to attract global capital.
In August, Hong Kong residents were given the opportunity to directly purchase BTC and ETH using Hong Kong or US dollars through the region’s largest online broker. Most recently, the Hong Kong Stock Exchange (HKSE) launched Asia’s first EU-compliant crypto index, cementing Hong Kong’s status as a leader in digital assets.
Similarly, Johnny Ng, a member of Hong Kong’s Legislative Council, recently pushed to make it easier for crypto and Web3 companies in the region to gain seamless access to banking services.
Although Hong Kong’s regulatory environment aims to foster the growth of the cryptocurrency sector, challenges remain. One of the main concerns remains illicit activities, including money laundering through digital assets. BTC is trading at $89,915 at press timedown 1.2% in the last 24 hours.
Featured image from Unsplash.com, chart from TradingView.com
