HSBC (HSBA.L) has no plans to launch a cryptocurrency trading desk or offer the digital coins as an investment to clients because they are too volatile and lack transparency, said to Reuters its chief executive Noel Quinn.
Europe’s largest bank on cryptocurrencies comes as the world’s largest and best-known Bitcoin fell nearly 50% from year-high after China cracked down the exploitation of the currency and that eminent lawyer Elon Musk has tempered his support. Read more
It stands out against rivals such as Goldman Sachs (GS.N), which Reuters said in March restarted its cryptocurrency trading desk, and UBS (UBSG.S), which other media said was exploring ways to offer currencies as an investment product. . Read more
“Given the volatility we are not in Bitcoin as an asset class, if our clients want to be there of course they are, but we are not promoting it as an asset class within of our wealth management business, ”said Quinn.
“For similar reasons, we don’t rush into stablecoins,” he said, referring to digital currencies like Tether that seek to avoid the volatility typically associated with cryptocurrencies by indexing their value to assets such as the US dollar.
Bitcoin traded at $ 36,387 on Monday, down nearly 50% in just 40 days from its annual high of $ 64,895 on April 14.
Pressure on the currency intensified after billionaire Tesla’s (TSLA.O) CEO and cryptocurrency backer Musk reversed his stance on Tesla accepting Bitcoin as payment.
However, Quinn said he believes in central bank digital currencies (CBDCs), which several countries, including the United States and China, are working on.
“CBDCs can facilitate international transactions in electronic wallets more simply, they remove friction costs and they are likely to operate transparently and have strong stored value attributes,” he said.
HSBC is discussing their CBDC initiatives with several governments, including countries like Britain, China, Canada and the United Arab Emirates, he said.
China’s CBDC project is one of the most advanced among the world’s major economies. City-wide trials involving state-owned banks began last year, and a cross-border use pilot is also underway in Hong Kong.
China is also involved in a separate project exploring CBDCs for cross-border payments, in which HSBC has participated.
As Beijing pushes forward central bank digital currencies, it has stepped up efforts to limit the use of cryptocurrencies.
China, which is at the heart of HSBC’s growth strategy, said last Tuesday that it had banned financial institutions and payment companies from providing services related to cryptocurrency transactions. Read more
Reuters reported in April that HSBC had banned clients of its online stock trading platform from purchasing shares of Bitcoin-backed MicroStrategy, saying in a message to clients that it would not facilitate the purchase or the exchange of products linked to virtual currencies. Read more
Quinn said his skepticism of cryptocurrencies stemmed in part from the difficulty in assessing the transparency of their owner, as well as issues with their immediate convertibility into fiat currency.
“I see Bitcoin as an asset class more than a means of payment, with very difficult questions about how to value it on clients’ balance sheets because it is so volatile,” he said.
“Then you get to stablecoins that have reserve support behind them to address stored value issues, but it depends on who the sponsoring organization is, plus the structure and accessibility of the reserve.
The growing popularity of cryptocurrencies has posed a problem for traditional banks in recent years as they attempt to balance satisfying customer interests with their own regulatory obligations to understand the source of their customers’ wealth.
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