The Hong Kong Monetary Authority said on Sept. 10 that crypto firms presenting themselves as banks are in contravention of the region’s Banking Ordinance. The HKMA argued such descriptions “may mislead members of the public into believing that those crypto firms” are financial institutions that they can trust.
False Descriptions Contravene Banking Ordinance
The Hong Kong Monetary Authority (HKMA) has told crypto firms to desist from the practice of falsely describing themselves as banks or characterizing their products as “deposits.” According to the Hong Kong financial services regulator, crypto firms engaged in this practice are in contravention of Hong Kong’s Banking Ordinance.
In a statement issued on Sept. 15, the HKMA said it is aware that some crypto businesses portray or describe themselves as crypto asset banks and digital banks. The regulator also warned crypto firms claiming to offer banking services or banking accounts. The HKMA argued such descriptions “may mislead members of the public into believing that those crypto firms” are financial institutions they can trust.
HKMA Does Not Supervise Crypto Firms
The regulator stated that no crypto firm should therefore use words commonly associated with banks when attempting to woo clients. The HKMA said:
Under the Banking Ordinance, only licensed banks, restricted licence banks and deposit-taking companies (collectively known as ‘authorized institutions’), which have been granted a licence by the HKMA can carry out banking or deposit-taking business in Hong Kong.
The regulator said unauthorized institutions using the word “bank” or those making “any representation that they are a bank or carrying on banking business in Hong Kong” are committing an offense.
Meanwhile, the HKMA reminded Hong Kong residents that since it does not supervise crypto firms any “funds placed with them are not protected by the Hong Kong Deposit Protection Scheme.” The regulator added that if residents are unsure of the status of a deposit-taking firm they should check “the register of authorized institutions on the HKMA’s website.”
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