It has recently come to our notice that certain crypto trading platforms have used the word “bank” in their names or websites, or mentioned the taking of “deposits” when describing their products and services. I would like to take this opportunity to remind the public to beware of such representations and not be misled.
In fact, the use of such representations may breach certain provisions of the Banking Ordinance, including section 97 on restrictions on use of name “bank”, section 97A on false statements as to authorized status and section 92 on offence to issue advertisements, etc. relating to deposits. It is an offence for any person who, without the consent of the HKMA, uses the word “bank” in the name, website or domain name under which such person is carrying on business in Hong Kong, or invites members of the public to make any deposit.
Hong Kong is an international financial centre with around 200 banks and deposit-taking companies operating here. Total bank deposits amount to HK$13 trillion. As banks take deposits from customers, a high degree of public trust is crucial to their operations. That is why, same as many other jurisdictions, licensing and supervision of banks are subject to stringent regulation by the laws in Hong Kong. For example, to avoid the public from being misled, the use of the word “bank” in names or the extension of an invitation to members of the public to make deposits, without obtaining prior approval from the HKMA, is prohibited. The list of banks and deposit-taking companies authorized by the HKMA can be found on the HKMA’s website (http://vpr.hkma.gov.hk/cgi-bin/vpr/index.pl).
As a matter of fact, even for non-banking industries, as long as the word “bank” (or the letters “b”, “a”, “n” and “k” in that order, or the Chinese expression “ngan hong” (銀行)) is planned to be used, no matter as part of a name, domain name, description of its activities or product representations, applications have to be made to the HKMA for approval. In the past five years, the HKMA received and approved 18 related applications. These organisations or bodies covered a wide range of sectors, including charity, food, alcohol, entertainment and digital game development, human resources, and stem cell storage. When considering the applications, the HKMA will carefully take into account whether the use of those names and the nature will mislead the public into believing that the applicants are operating banking or deposit-taking businesses, before granting any consent. However, I would like to point out that organisations or bodies with intent to defraud would not apply to the HKMA as required. Members of the public should therefore pay heed to not fall prey to these traps.
As prices of crypto assets are highly volatile, the public should exercise extra caution about the associated risks, regardless of the channels through which they buy or transact crypto assets. It must also be reiterated that although certain crypto trading platforms describe the funds placed with them as “deposits”, the funds are not protected by the Deposit Protection Scheme in Hong Kong, as these trading platforms are not banks authorized by the HKMA. In other words, the funds may not be recovered should these trading platforms collapse. Therefore, the public should fully understand the risks involved before opening accounts and placing funds with crypto trading platforms. If in doubt, it is best to seek professional advice.
Besides, we have noticed some claims allegedly acting as an agent to deal in crypto assets issued by the HKMA, or offering crypto assets approved or authorized by the HKMA. I would like to stress that the HKMA has never issued or approved any crypto asset-related investment schemes or products.
Before making any investment decision, the public should fully understand the nature and associated risks of the product. Be a smart investor, as always!
Deputy Chief Executive
Hong Kong Monetary Authority
21 June 2018