HSBC Has No Plans to Get Into Crypto, Boss Noel Quinn Says -- Financial News
May 24 2021 - 08:31AM
Dow Jones News
By Emily Nicolle
Of Financial News
HSBC Holdings PLC is staying away from the cryptocurrency
trading game, despite a number of its rivals planning to enter the
space.
The bank's Chief Executive Noel Quinn said it has no plans to
launch a cryptocurrency trading desk or offer exposure to digital
assets to its clients, due to the extreme price volatility and lack
of transparency they offer.
Mr. Quinn's comments follow a recent move by China, a key market
for HSBC, in stepping up its ban on financial institutions
providing services to cryptocurrency-related businesses.
Bitcoin took a beating over the weekend as China stepped up its
curbs on cryptocurrency trading, falling almost 50% from its April
all-time high. Other cryptocurrencies crashed similarly, though
trading had somewhat stabilized by mid-morning on Monday.
"Given the volatility we aren't into bitcoin as an asset class,
if our clients want to be there then of course they are, but we
aren't promoting it as an asset class within our wealth management
business," Mr. Quinn told Reuters in an interview Monday.
HSBC's stance appears in stark contrast to other banks such as
Goldman Sachs Group Inc. and Morgan Stanley, both of which have
announced plans to offer bitcoin-exposed products to clients.
HSBC had already moved to limit its clients' access to
crypto-exposed stocks such as MicroStrategy Inc., which has bought
billions of dollars worth of bitcoin for its corporate treasury.
The bank was contacted for comment.
Mr. Quinn said the bank was similarly uninterested in
stablecoins, a form of cryptocurrency which is pegged to one or
more fiat currencies such as the U.S. dollar in a bid to contain
its volatility.
"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.
"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 organization is plus the structure and
accessibility of the reserve."
Writing in a note to clients a few days earlier, Goldman's head
of digital assets Michael McDermott said it was the "fear of
missing out" (FOMO) that was pushing the entry of banks and
institutional investors into the crypto space.
"If you're an asset manager or running a macro fund and your
closest rivals are all investing and seeing material returns, your
investors will naturally wonder why you aren't investing," Mr.
McDermott said on Friday.
"But I see investor interest in crypto enduring; we've crossed
the Rubicon in terms of institutional buy-in, and there is much
greater value in the space than there was three or four years
ago."
Website: www.fnlondon.com
(END) Dow Jones Newswires
May 24, 2021 08:28 ET (12:28 GMT)
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