The Hong Kong Monetary Authority has joined the rising chorus of voices warning about bitcoin and other digital currencies.
HKMA chief executive Norman Chan Tak-lam warned banks and financial institutions trading or handling bitcoin or other digital currencies to be careful about breaching anti-money-laundering requirements.
"Bitcoin or other digital currencies do not require holders to trade under their real name which allows them to be used for money laundering activities," Chan said on the sidelines of a conference on Monday. "Bitcoin and other digital currencies are considered as commodities, so investors could trade them as commodities. However, investors need to understand these commodities have no monetary backing," he added.
Hong Kong's position as one of the world's largest financial centres means the city is vulnerable to money laundering. In May, the HKMA re-emphasised its determination "to fight serious financial crime and laundering."
"Cryptocurrencies, ICOs and other investment arrangements involving digital tokens are highly speculative and may pose significant risks. Investors are reminded to exercise due diligence to understand the features and associated risks," said David Kneebone, general manager of the Investor Education Centre.
ICO is an acronym for Initial Coin Offering, a major means by which the creators of token based digital platforms raise capital from investors.
Chan is not the only senior figure in the financial services industry to warn of the dangers of cryptocurrencies. Earlier this month, Larry Fink, chief executive of BlackRock (BLK) told the South China Morning Post that bitcoin and other cryptocurrencies were mostly being used for illicit transactions, and Jamie Dimon, chief executive of JP Morgan (JPM) said last week that "bitcoin was a fraud."
The People's Bank of China (PBOC) has also launched a crackdown on bitcoin and other cryptocurrencies, which has hit market...