The Hong Kong Monetary Authority (HKMA) has warned the public to remain vigilant against foreign crypto companies falsely presenting themselves as banks, according to a November 15 notice.
The regulator revealed that some foreign crypto companies are portraying themselves as banks to gain the trust of Hong Kong users. Many of these entities operate without proper licenses and are not authorized to use the term “bank” in their branding or promotional materials.
The HKMA stressed that such actions could violate the Banking Regulation, which regulates the use of banking-related terms and activities in Hong Kong.
Offenders
The warning identified two unnamed foreign crypto companies as violators. One reportedly called itself a bank, while the other described its product as a debit card. These statements, according to the HKMA, risk misleading the public into believing that these entities are licensed banks under its supervision.
The Financial Authority clarified that only licensed banks, limited licensed banks and HKMA authorized depository companies are legally allowed to conduct banking or depository activities in Hong Kong.
HKMA stated that the Banking Regulation prohibits unauthorized persons or organizations from using “bank” in their name or description. It also prohibits misleading statements suggesting that an entity is a bank or carries out banking activities in Hong Kong.
The regulator also emphasized that crypto companies that are not recognized as authorized institutions in Hong Kong fall outside the scope of the regulations.
It added that foreign crypto companies that use the term “bank” or brand themselves as “crypto banks” licensed in other jurisdictions do not necessarily have a banking license in Hong Kong. Likewise, products or services labeled “bank” may not come from licensed banks in the region.
The warning comes amid Hong Kong’s recent decision to expand its list of licensed crypto exchanges by the end of the year.
Despite its reputation as a major Asian crypto hub, Hong Kong maintains a rigorous licensing process. So far, only three crypto exchanges – OSL Exchange, HashKey Exchange and HKVAX – have secured licenses.