Regulation
Hong Kong battles rise of counterfeit currencies amid crypto frauds
Hong Kong police have issued new warnings over the rise in counterfeit banknotes. This alarming trend has seen such counterfeits being used in elaborate crypto frauds.
As digital currency and assets continue to evolve, the intertwining of traditional counterfeiting with modern financial services scams represents a complex challenge for law enforcement and regulatory agencies.
Hong Kong authorities crack down on counterfeit notes
According to the South China Morning Post, authorities confiscated 3,396 counterfeit notes between January and April this year. This is a sharp increase from the 553 notes seized during the same period last year, which had a total face value of around HK$2.55 million (~$326,130) .
This increase in counterfeiting includes many counterfeit notes specifically intended for use in crypto transactions. Police reported the seizure of 1,693 “training notes” and 347 low-quality counterfeit notes in three major crypto scam case. Police subsequently arrested three individuals.
These training notes, typically used to train bank staff, look a lot like legitimate currency. However, the Chinese characters on the notes say “practice coupons”.
Learn more: What is Fiat currency? How is it different from cryptocurrency?
Additionally, the rise in counterfeit HK$1,000 notes is of particular concern, with the total reaching 2,053 this year. Additionally, the number of counterfeit HK$500 notes more than quadrupled to 919. Other denominations, such as HK$100, HK$50, HK$20, and HK$10 Hong Kong, were also affected, although to a lesser extent.
A police spokesperson highlighted the poor quality of most counterfeits. They advised the public to check security features such as the dynamic glitter pattern and windowed metal thread, distinctive of genuine Hong Kong currency.
“On receipt of a counterfeit note, you must immediately hand it over to the police or a bank and do not attempt to use it again. Otherwise, you could commit the offense of circulating counterfeit notes,” warned the police spokesperson.
Alongside these enforcement efforts, Hong Kong is also advancing its crypto regulatory framework. Indeed, given the high penetration of crypto in the city, the need for vigilance and effective regulation is evident.
Crypto penetration rate in Hong Kong. Source: Statist
Recently, Securities and Futures contracts Commission (SFC) listed 11 cryptocurrency exchanges are considered “deemed authorized”. These measures aim to prevent money laundering and ensure a secure trading environment. They explicitly prohibit services to users in mainland China, aligning with local crypto bans.
In addition, discussions are underway to possibly integrate staking mechanisms in Ethereum (ETH) exchange-traded funds (AND F). This initiative could provide innovative investment opportunities and strengthen Hong Kong’s attractiveness as a financial center.
Learn more: Crypto regulation: what are the advantages and disadvantages?
Ongoing efforts to strengthen safety measures and regulatory oversight are crucial. They help maintain public trust and ensure the integrity of financial and digital markets.
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