HSBC is ‘Cautious’ About Crypto and ‘Not Interested Now’ but Open to Change
HSBC Announces Partnership With Blockchain-Based Trade Platform In Hong Kong
Cryptocurrency has been a sore subject for banks and other financial institutions for quite some time. There are many banks that have completely rejected crypto, even banning their customers from using their credit card to make purchases on any platform. However, there are other banks that still see the value in blockchain technology, helping them to reduce future costs and maintain transparency. HSBC is one of the few institutions taking a leap into this technology.
The first time HSBC decided to test the waters was with their first trade finance deal in May. This transaction uses the technology from a single blockchain platform, and included a cross-border transaction, which has been the first transaction of its kind. The goal of the pilot transaction was to see if the technology would work for HSBC true goal – to reduce the risk of fraud, specifically for letters of credit.
During the pilot, HSBC made the announcement that they would be partnering with a Hong Kong blockchain platform, along with Standard Chartered PLC and 21 other banks. This group would participate primarily in trade financing, which is when banks eliminate a payment risks for both importers and exporters.
Josh Bottomley is the Global Head of Digital at HSBC, and he made the transition from Google to the banking industry effortlessly. His role with HSBC is to head up the digital strategy for retail and wealth management arms. Bottomley said, in an interview with Forbes, “We are cautious looking into this area,” referring to how HSBC plans to integrate cryptocurrency. He continued, “There’s a use case when you have a token or currency that’s actually useful for a particular purpose, and it serves that need.”
With so many ICOs launching in the last year, it is easy to see the demand for using digital assets in the financial world. Big banks have to make the decision of if they will be part of this innovative stride, or if they want to be part of the industry that gets left behind. Bottomley does not see HSBC interested in getting involved with cryptocurrency at the moment, since they do not believe that Bitcoin and Ethereum are an investment asset.
Bottomley explained why they are presently waiting on the cryptocurrency game. “One of the criteria we use is if an asset class is showing incredible volatility up and down. For the vast majority of our customers, that makes it an inappropriate saving or investment vehicle,” he said. Even the Bank of England agrees, citing the reputational risks” that come with cryptocurrency.
According to a statement from a spokesperson of HSBC, “HSBC does not trade cryptocurrencies, nor do we process payments denominated in virtual or cryptocurrencies.”