Crypto Firms Mislead Public With 'Bank' Claims, Hong Kong Central Bank Warns

The Hong Kong Monetary Authority (HKMA) has issued a stern warning to cryptocurrency firms against using the term "bank" or describing their products as "deposits."

This move comes amidst growing concerns over potential misrepresentation by crypto businesses, which could mislead the public into believing they are dealing with licensed banking institutions.

This development further underscores the importance of clarity and regulation in the rapidly evolving digital asset landscape, a topic that will be extensively discussed at Benzinga's Future of Digital Assets conference on Nov. 14. The conference aims to shed light on the latest trends, challenges, and regulatory updates in the crypto world.

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The HKMA has observed that several crypto firms are using terms such as “crypto bank,” “crypto asset bank,” “digital asset bank,” and “digital trading bank.”

Additionally, some of these firms are promoting their products as "banking services" or "banking accounts" and describing funds from clients as "deposits".

Such descriptions might give the impression that these crypto firms are authorized banks in Hong Kong, potentially misleading the public.

According to the Banking Ordinance, only entities with a license from the HKMA, including licensed banks, restricted license banks, and deposit-taking companies, are permitted to conduct banking or deposit-taking activities in Hong Kong.

Any other entity using the term "bank" in their business name or description, or implying they are conducting banking activities, is committing an offense.

Furthermore, the HKMA emphasized that crypto firms not recognized as banks in Hong Kong are not under its supervision.

Consequently, funds placed with such firms are not safeguarded by the Hong Kong Deposit Protection Scheme.

For public assurance, the HKMA has advised individuals to verify the authenticity of any entity claiming to be a bank or soliciting deposits in Hong Kong.

This can be done by referring to the register of authorized institutions on the HKMA’s official website. In case of lingering doubts, the public can also reach out to the HKMA’s Public Enquiry Service hotline.

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