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Hong Kong Monetary Authority Warns Against Deceptive Cryptocurrency ‘Banks’

CryptoHong Kong Monetary Authority Warns Against Deceptive Cryptocurrency 'Banks'

The Hong Kong Monetary Authority (HKMA) has issued a strong warning to cryptocurrency-related companies that use deceptive names, particularly those presenting themselves as “banks” offering “deposits.” The HKMA has cautioned the public about engaging with such entities due to the potential risks associated with misleading labels.

The HKMA’s concern arises from its discovery of numerous cryptocurrency firms in Hong Kong using titles like “crypto bank,” “digital asset bank,” “crypto asset bank,” “digital bank,” or “digital trading bank.” Regulators argue that these names violate Hong Kong’s Banking Ordinance and could create a false impression that these crypto businesses are authorized banks in Hong Kong, capable of safeguarding people’s savings.

The HKMA emphasized that, under the Banking Ordinance, only institutions with proper licenses from the HKMA are legally allowed to provide banking services in Hong Kong. Any unauthorized operations are considered illegal and subject to penalties.

The HKMA stated, “Other than authorized institutions, it is an offense for any person to use the word ‘bank’ in the name or description under which they carry on business, or make any representation that they are a bank or carrying on banking business in Hong Kong; and it is also an offense for any person to carry on a business of taking deposits in Hong Kong or invite members of the public to make any deposit.”

This warning from the HKMA follows a recent caution from the Securities and Futures Commission (SFC) regarding the cryptocurrency exchange JPEX, which was deemed an unauthorized entity. The SFC highlighted various suspicious practices by JPEX, including false claims of being a licensed entity, adding to concerns about misleading representations in the crypto industry.

The HKMA’s alert underscores the growing need for regulatory oversight and clarity in the cryptocurrency sector. As digital assets and crypto-related businesses continue to proliferate, regulatory authorities worldwide are taking measures to protect consumers from potential scams and deceptive practices. By enforcing legal standards and ensuring proper authorization for banking services, regulators aim to uphold the integrity and trustworthiness of Hong Kong’s financial system.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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