LONDON • HSBC has no plans to launch a cryptocurrency trading desk or offer the digital coins as an investment to customers, because they are too volatile and lack transparency, its chief executive Noel Quinn told Reuters.
Europe’s largest bank’s stance on cryptocurrencies comes as the Bitcoin dived nearly 50 per cent from the year’s high, after China cracked down on mining the currency and prominent advocate Elon Musk tempered his support.
It marks it out against rivals like Goldman Sachs, which Reuters in March reported had restarted its cryptocurrency trading desk, and UBS, which other media said was exploring ways to offer the currencies as an investment product.
“Given the volatility, we are not into Bitcoin as an asset class, if our clients want to be there then of course they are, but we are not promoting it as an asset class within our wealth management business,” Mr Quinn said. “For similar reasons we’re not rushing into stable coins,” he said, referring to digital currencies such as tether that seek to avoid the volatility typically associated with cryptocurrencies by pegging their value to assets like the United States dollar.
Bitcoin traded at US$36,387 on Monday, down nearly 50 per cent in just 40 days from its year high of US$64,895 on April 14. Pressure on the currency intensified after Tesla chief executive Musk reversed his stance on Tesla accepting Bitcoin as payment.
But Mr Quinn said he was a believer in central bank digital currencies (CBDCs), which countries including the US and China are working on. “CBDCs can facilitate international transactions in e-wallets more simply, they take out friction costs and they are likely to operate in a transparent manner and have strong attributes of stored value,” he said.
HSBC is talking to some governments about their CBDC initiatives, including those of Britain, China and the United Arab Emirates, he said. China’s CBDC project is one of the most advanced among global economies. City-wide trials involving state-owned banks began last year, and there is a pilot project for cross-border use under way in Hong Kong. China is also involved in a separate project exploring CBDCs for cross-border payments, which HSBC has been involved in.
While Beijing presses ahead with CBDCs, it has stepped up efforts to curb usage of cryptocurrencies. China said last Tuesday it had banned financial institutions and payment firms from providing services related to cryptocurrency transactions.
Reuters reported last month that HSBC had banned customers on its online share trading platform from buying shares in Bitcoin-backed MicroStrategy, saying in a message to clients that it would not facilitate the buying or exchange of products related to virtual currencies.
Mr Quinn said his scepticism of cryptocurrencies partly arose from difficulty in assessing the transparency of who owns them, and problems with the ready convertibility into fiat money. “I view Bitcoin as more of an asset class than a payments vehicle, with very difficult questions about how to value it on the balance sheet of clients because it is so volatile,” he said.
The soaring popularity of cryptocurrencies has posed a problem for mainstream banks in recent years as they try to balance catering to clients’ interest with their regulatory obligations to understand the source of their customers’ wealth.