September 19, 2023
By Sharan Kaur Phillora
Hong Kong’s financial watchdog, the Hong Kong Monetary Authority (HKMA), has issued an urgent warning to the public about cryptocurrency companies fraudulently marketing themselves as “banks” without the required licenses. These firms, which often label themselves as “crypto banks” or “digital asset banks”, are not authorized to conduct banking or deposit-related operations in Hong Kong under the local Banking Ordinance.
Here’s what we know:
The HKMA stated that such misrepresentations violate the region’s banking laws. It emphasized that only banks and deposit-taking institutions licensed by the HKMA can legally offer these services and are covered under protections such as the Hong Kong Deposit Protection Scheme.
This alert comes at a pivotal time as Hong Kong positions itself as a global center for cryptocurrency investments. The city has recently introduced new regulations to promote digital asset trading. However, the HKMA urges the public to be vigilant and conduct thorough checks before interacting with any self-proclaimed crypto bank to avert potential scams.
Hong Kong’s decision to relax prior restrictions and permit retail investors to trade cryptocurrencies has led to an urgent need for increased oversight to protect consumers from fraudulent activities. Earlier this week, the Hong Kong Securities and Futures Commission (SFC) flagged a suspicious crypto exchange, JPEX, for operating without the necessary license and misleading its investor base.
Despite the challenges, experts believe that with stringent oversight, digital currencies can enhance financial access. As Hong Kong adopts a more welcoming stance towards the crypto industry than mainland China’s bans, the region must ensure that loopholes are closed to protect its citizens from scams.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.