On September 15th the Hong Kong Monetary Authority (HKMA) issued a warning regarding cryptocurrency companies that falsely present themselves as “banks” or advertise services as “deposits.”
According to the HKMA such misleading descriptions may violate Hong Kongs Banking Ordinance, which strictly prohibits organizations from posing as banks or suggesting that they provide banking services. Engaging in activities is considered illegal.
In their statement the HKMA highlighted instances where cryptocurrency companies have adopted titles like “crypto bank ” “digital asset bank,” or “digital bank ” falsely claiming to offer similar services and accounts to traditional banks.
The concern lies in the potential for these terminologies to deceive the public into perceiving these companies as officially recognized financial institutions in Hong Kong. This deception is further compounded when these firms utilize terms like “deposits” to describe customer funds and promote low risk” savings plans with “high returns.”
This warning is part of an effort by Hong Kongs authorities to protect consumers within a territory that has shown significant interest, in cryptocurrencies. It follows closely on the heels of another alert raised by the Securities and Futures Commission (SFC) regarding activities related to JPEX crypto exchange.
With the rise in the number of these platforms providing banking services it has become essential for regulatory bodies to ensure transparency and implement safety measures, for the public.
Lastly the HKMA emphasized that cryptocurrency firms operating without a banking license do not fall under HKMAs supervision and any funds held by them are not protected by the Hong Kong Deposit Protection Scheme.