Emily Walker
The Hong Kong Monetary Authority (HKMA) has issued a caution to the public regarding two foreign crypto companies that are allegedly misrepresenting themselves as banks. These companies are accused of using the term “bank” in relation to their products and services, possibly confusing consumers.
HKMA Takes Action Against Misleading Crypto Companies
Today, the HKMA, which also serves as the central bank for Hong Kong, warned citizens about two digital asset firms that are purportedly misrepresenting their status as banks. This misrepresentation may violate Hong Kong’s Banking Ordinance, which lays down the laws governing the banking industry in the region.
The Banking Ordinance is the main legal framework for banking operations in Hong Kong, requiring licensing, oversight, and ensuring that only authorized entities can operate as banks or offer banking services.
In their announcement, the HKMA mentioned that one of the two companies claimed to be a bank, whereas the other referred to its card product as a “bank card” on its website. Such language, according to the authority, could mislead consumers into believing these firms operate under the HKMA’s regulatory authority. They stated:
It is illegal for anyone other than licensed banks in Hong Kong to use the term “bank” in their business name or description, or to imply that they are conducting banking operations in Hong Kong.
The HKMA did not reveal the identities of the two firms but clarified that crypto companies that hold licenses from other regions are not automatically recognized as legitimate banks in Hong Kong.
While Hong Kong aims to position itself as a leading crypto hub with supportive regulations, local authorities are vigilant regarding illegal activities tied to digital currencies.
Hong Kong Aims to Be a Leading Crypto Center
Hong Kong’s supportive stance on cryptocurrency is in stark contrast to mainland China’s complete ban on related activities. Nonetheless, recent developments indicate that China might be easing its restrictions on digital assets following Donald Trump’s success in the 2024 presidential election.
Hong Kong has established itself as a forerunner in the cryptocurrency sector, particularly in Asia. A recent Chainalysis report places Hong Kong as the leading region in East Asia for crypto adoption.
This year, to advance its crypto market, the Hong Kong Securities and Futures Commission (HKSFC) approved several exchange-traded funds (ETFs) for Bitcoin (BTC) and Ethereum (ETH), showcasing the region’s confidence in attracting global investment in digital assets.
In August, residents of Hong Kong were given the opportunity to buy BTC and ETH directly using Hong Kong or US dollars through the area’s dominant online broker. The Hong Kong Stock Exchange (HKSE) has also introduced Asia’s first EU-compliant crypto index, strengthening Hong Kong’s position in the digital asset industry.
In addition, Johnny Ng, a member of the Hong Kong Legislative Council, has advocated for easier access to banking services for crypto and Web3 businesses operating in the region.
While Hong Kong’s regulatory framework aims to encourage the cryptocurrency sector’s growth, challenges such as potential illegal activities, including money laundering involving digital currencies, remain a concern. Currently, BTC is trading at $89,915, reflecting a 1.2% decline over the past day.