Hong Kong Clamps Down on Crypto Firms’ Unauthorized Use of ‘Bank’ Label

The Hong Kong Monetary Authority (HKMA) has issued a stern warning against cryptocurrency firms that misrepresent themselves as banking institutions, highlighting two recent cases where overseas companies potentially violated local banking regulations.

In a statement released on November 15, the HKMA disclosed that one crypto firm had claimed to be a “bank,” while another marketed its product as a “bank card” during their operations in Hong Kong. The monetary authority did not identify the companies involved but emphasized that such misrepresentation could constitute a violation of the Banking Ordinance.

“These claims risk misleading consumers into believing these firms are licensed and supervised by the HKMA,” the central bank stated, underscoring the serious nature of the infractions.

Under Hong Kong’s Banking Ordinance, only three types of institutions are legally permitted to conduct banking operations in the territory: licensed banks, restricted license banks, and deposit-taking companies. The unauthorized use of the term “bank” or any of its derivatives in business descriptions is considered an offense.

The warning comes at a critical time as Hong Kong positions itself as a global cryptocurrency hub. The territory launched a crypto licensing regime in June 2023, with three exchanges – OSL, HashKey, and HKVAX – having secured licenses to date.

To protect consumers, the HKMA advised the public to verify the legitimacy of financial institutions through its official Register of Authorized Institutions. The authority has also made its Public Enquiry Service hotline available for concerned citizens seeking to verify banking credentials.

This regulatory intervention reflects Hong Kong’s ongoing efforts to balance its cryptocurrency ambitions with consumer protection, as the region continues to attract digital asset firms while maintaining strict oversight of their operations.