The Hong Kong Monetary Authority (HKMA) has warned the general public about two foreign-based crypto firms allegedly misrepresenting themselves as banks. The firms were found to have used the term “bank” when describing their services, potentially misleading consumers.

HKMA Cracks Down On Crypto Firms Posing As Banks

The HKMA, which also serves as Hong Kong’s central bank, alerted the general public today to be wary of two digital asset firms accused of falsely portraying themselves as banks. In accordance with the regulator, such misrepresentation may breach Hong Kong’s Banking Ordinance, which governs the region’s banking sector.

For the uninitiated, the Banking Ordinance is the first laws regulating banking activities in Hong Kong. It mandates licensing, supervision, and oversight of banking operations while prohibiting unauthorized entities from presenting themselves as banks or offering banking services.

In its statement, the HKMA revealed that considered one of the firms claimed to be a bank, while the opposite advertised a card product on its website as a “bank card.” Such words, the regulator noted, could mislead consumers into believing the firms were operating under HKMA’s supervision. The announcement stated:

Apart from licensed banks in Hong Kong, it’s an offence for any person to make use of the word “bank” within the name or description under which the person carries on business, or makes any representation that the person is a bank or is carrying on banking business in Hong Kong.

While the regulator didn’t disclose the names of the 2 entities, it emphasized that crypto firms claiming licenses in other jurisdictions should not mechanically recognized as licensed banks in Hong Kong.

Despite Hong Kong’s ambition to determine itself as a worldwide hub for cryptocurrency through favorable regulations, the region’s authorities are actively monitoring illegal activities linked to digital assets.

Hong Kong Wants To Turn out to be A Global Crypto Hub

Hong Kong’s crypto-friendly stance contrasts sharply with neighboring China, where a blanket ban on cryptocurrency-related activities stays. Nevertheless, recent reports suggest China could also be softening its approach to digital assets following Donald Trump’s 2024 US presidential election victory.

Hong Kong has emerged as one of the crucial crypto-progressive regions globally, particularly in Asia. In accordance with a recent report by Chainalysis, Hong Kong ranked as the highest region in East Asia for crypto adoption.

To boost its crypto ecosystem, the Hong Kong Securities and Futures Commission (HKSFC) approved several Bitcoin (BTC) and Ethereum (ETH) exchange-traded funds (ETFs) earlier this yr. This move highlighted the region’s confidence within the potential of digital assets to draw global capital.

In August, Hong Kong residents gained the flexibility to directly purchase BTC and ETH using Hong Kong or US dollars through the region’s largest online broker. More recently, the Hong Kong Stock Exchange (HKSE) launched Asia’s first EU-compliant crypto index, further solidifying Hong Kong’s status as a frontrunner within the digital asset space.

Similarly, Hong Kong Legislative Council member Johnny Ng recently made a push to make it easier for crypto and Web3 firms within the region to acquire seamless access to banking services.

While Hong Kong’s regulatory environment goals to nurture the expansion of the cryptocurrency industry, challenges persist. One among the first concerns stays illicit activities, including money laundering through digital assets. BTC trades at $89,915 at press time, down 1.2% previously 24 hours.

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