Bank that Had Appetite for Drug Money Has None for Bitcoin
UK bank HSBC found itself under fire again, with commenters arguing that the bank which had appetite for drug money does not have appetite for bitcoin (BTC). After it had been fined for its involvement in facilitating money laundering by Mexican and Colombian drug cartels, HSBC's recent move - allegedly banning the users of its online share trading platform from purchasing US-based software developer MicroStrategy stock - suggests its thirst for cash does not extend to the world's number one crypto.
The story has been discussed for several days now, fuelled by unverified sources, but a message addressed to an HSBC InvestDirect client has now been reported on by Reuters as well - and it indicates that the bank does not want to facilitate transactions related to or referencing the performance of cryptocurrencies.
Per a picture shared online by Twitter account Camiam, the bank seemingly said it “has changed the policy on virtual currencies (such as Bitcoin, Ethereum and other digital currencies)” and it “will not participate in facilitating (buy and/or exchange) product related to virtual currencies, or products related or referencing the performance of virtual currency.”
The message assured customers that it would allow them to hold, sell or transfer-out MicroStrategy stock on their InvestDirect accounts, but it would not permit any new purchases or transfers-in of the company’s shares.
Hey @michael_saylor , you may want to ask your legal team if what @HSBC_CA is doing here is legal. It sure does not… https://t.co/4218VuKtR7— Camiam⚡️☣️ (@Camadamus)
MicroStrategy has positioned itself as one of the most bullish non-crypto businesses, embarking on a bitcoin shopping spree over the past months. Earlier this month, the company spent a further USD 15m on the cryptocurrency, buying BTC 253. As of April 5, MicroStrategy held a total of BTC 91,579 (USD 5.76bn).
Commenting on its new stance, HSBC said in a statement that it had “no appetite for direct exposure to virtual currencies and limited appetite to facilitate products or securities that derive their value from VCs (virtual currencies),” as reported by Reuters. The bank also said its policy towards crypto had been in place since 2018 and is kept under review, while it couldn't immediately say which countries the ban applied to.
Meanwhile, crypto industry players were unimpressed by HSBC’s hardline policy, accusing the bank of discriminating bitcoin - while eagerly accepting funds from highly controversial sources.
Mentions of the bank’s involvement in drug money laundering schemes, a decision that cost HSBC some USD 1.92bn in fines, were a particularly popular reference among the crypto commentariat. HSBC agreed to pay this sum to US authorities in 2012, apologizing and acknowledging that it failed to maintain an effective program against money laundering, after Mexico’s Sinaloa cartel and Colombia’s Norte del Valle cartel laundered USD 881m through HSBC and a Mexican unit, per the US Department of Justice (DOJ).
"[HSBC] was fined [USD] 1.8B for laundering cartel cash," said Eric Meltzer, a founding partner at blockchain investment firm Primitive Ventures. "[HSBC] enlarged windows at certain Mexican branches to facilitate drop off of giant boxes of $ from cartel operatives. [The DOJ] report detailed a culture of abuse, coke, alcoholism and a complete disregard for the law. [D]isgusting."
But another question arose online - what about other companies connected to crypto then, including giants like Tesla, which started accepting BTC payments, or Square, which invested millions in the cryptocurrency?
For example, Twitter user Chilipiper234 asked: "HSBC better take that cartel money, right? Do you also forbid your customers to buy Tesla or Square because they have Bitcoin on their balance sheet?"
That question is something the MicroStrategy legal department should look into, argued The Investor's Podcast Network host Preston Pysh.
Cryptonews.com reached out to HSBC for comment.
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