HSBC rules out move into crypto market over volatility concerns
HSBC will not enter the cryptocurrency market, its chief executive has said, amid concerns over volatility and a lack of transparency.
“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,” Noel Quinn told Reuters.
Cryptocurrencies have hit an all-time high in recent months as institutional investors rallied behind the likes of Bitcoin and Ethereum.
In March Goldman Sachs restarted its cryptocurrency trading desk while reports suggest JP Morgan is planning to roll out a Bitcoin fund.
Other financial institutions have been more sceptical. Last month Natwest said it had “no appetite” to serve business customers which accept cryptocurrency as it takes a cautious approach to the market.
Quinn’s comments today come after a bruising weekend for the crypto market. Bitcoin is down nearly 50 per cent in just 40 days from its year high of $64,895 in April.
It came under pressure after Tesla chief Elon Musk, a big proponent of cryptocurrencies, reserved his stance on the electric carmaker accepting Bitcoin as payment.
Quinn’s scepticism also comes amid concerns about the lack of transparency amongst cryptocurrencies, particularly in assessing who owns them.
“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.
Quinn also said HSBC would not rush into so-called stablecoins, which are digital currencies that try to avoid volatility by pegging their value to assets like the US dollar.
“Then you get to stablecoins which do have some reserve backing behind them to address the stored value concerns, but it depends on who the sponsoring organisation is plus the structure and accessibility of the reserve.”