- HSBC, the second-largest bank in Europe, has dismissed Bitcoin as an asset class, claiming it’s too volatile and lacks transparency.
- This anti-BTC stance comes amid some of the world’s largest banks including Goldman Sachs and JPMorgan getting into Bitcoin funds.
One of the world’s largest banks has dismissed Bitcoin as an asset class, claiming it’s too volatile. HSBC, which is Europe’s second-largest bank, further claimed that the cryptocurrency field lacks the transparency required for an asset class its size.
Based in London, HSBC has over $2.5 trillion in assets under management. It has ranked as the biggest bank in Europe for the past eight years, losing out to the French conglomerate BNP Paribas earlier this year.
As its executive revealed in a recent interview, HSBC isn’t looking to get into Bitcoin. The bank’s CEO Noel Quinn told Reuters that it will not be launching a trading desk or offer Bitcoin as an investment to its clients, despite many other big banks doing so in recent months.
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.
He further dismissed speculation that HSBC would be looking at offering stablecoins. This has been a strategy some banks have used to avoid the volatility that regular cryptos face. JPMorgan, America’s largest bank, is the most prominent in this field, launching its own stablecoin, the JPM Coin in October last year.
Bitcoin, on its part, has seen one of its most volatile weeks. It lost up to $1 trillion in a week, its biggest loss yet. This volatility further entrenches HSBC’s anti-Bitcoin stance.
HSBC CEO: Bitcoin is impossible to value
Quinn doubled down on his criticism against Bitcoin, one of which is how to value it.
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.
The lack of transparency in the industry is also concerning, he believes. It’s impossible to tell who owns the crypto and whether they can be trusted in regard to market integrity. The banking veteran was tapping into one of the most common arguments against Bitcoin – that manipulation in the market is rife. This has purportedly been one of the key reasons the SEC has yet to approve a Bitcoin ETF.
Stablecoins have been the answer to market volatility. However, according to Quinn, their problem lies with the issuers.
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.
Tether, the biggest stablecoin issuer, is currently in a legal battle with American authorities on market manipulation. The authorities have also claimed that Tether’s stablecoins aren’t fully backed by USD reserves as it has claimed for years.