The hypocrisy of HSBC and other crypto-reluctant banks
I can imagine the geniuses at HSBC think that the following scene might play out in the shadows all around the world:
Scene: A man (Scott) walks tentatively towards a dark alley. He nervously checks over his shoulder and fiddles with the sleaves on his coat. After pausing for a moment to gather his nerve he walks down the alley trying to catch the attention of a man standing in the shadows.
Scott: (Nervously) Um, hey, um
The man in the shadows (Tyler) turns slowly towards Scott. He looks at him directly with contempt in his eyes.
Tyler: Do I know you, man?
Scott: We met at, um, that thing, um, last week (he visibly gulps)
Tyler: Spit it out, man.
Scott: Terry’s place. The party in the loft over by the park. Last weekend. I’m friends w…
Tyler: (Cuts Scott off) Oh yeah, I remember (Smiles knowingly). Seems to me that you are friends with Molly, if my memory serves.
Scott: (laughs as he visibly starts to react) Yeah, so I was wondering if you could..
Tyler: (Cuts Scott off) Yeah, man (Glances over shoulder), what do you need?
Scott: I was thinking, like, $50?
Tyler: Sure, man.
Scott reaches into his pants pocket and takes out his wallet. Reaching in, he pulls out a $50 bill.
Tyler: WHOA! WHOA! WHOA! (His face with a horrified and confused look on his face) You know we don’t take fiat currency, we drug dealers. Only crypto, man! HOW DARE YOU SULLY THE GOOD NAME OF FIAT CURRENCY!? Crypto is the preferred currency of criminals, worldwide, man. GET OUT OF HERE!
Deflated Scott walks away from Tyler. Tonight’s party will have to be drug free.
They have to think this at HSBC head office, right? If they didn’t believe it then why would they be still banning their customers from trading in stocks that deal in “virtual currency product(s)”
They said this late last week, while the rest of the world was talking about Coinbase’s IPO (NASDAQ: COIN) and bitcoin hitting all-time highs. Their reasoning?
They won’t say it outright, but those inside the industry say that it’s entirely based on a belief that crypto is too exposed to the darker elements of the world — drug trafficking and money laundering, to be specific.
It would be easy to dismiss HSBC as being a bunch of uptight, out-of-touch suits, but this is the largest bank in Europe that we are talking about. And, they have been hit with some significant anti-money laundering fines in the past. HSBC isn’t alone in this hypocrisy, but they are the biggest villains in this story.
That’s what makes this even more outrageous, really. HSBC is more than familiar with dirty money — they dealt with it for years and got caught. Why they have decided that crypto is the culprit now beggars belief.
There is little doubt that sometimes crypto is used to do illegal things. It’s money. Money is used to do illegal things. The virtual aspect of it is not the defining characteristic.
In our above scenario, Tyler is gonna take Scott’s $50 and Scott is going to have himself a party. Like, I don’t really need to explain that or verify that drug dealers take cash payments to you. Even the most straight edge among you probably understands that cash in your hand can be exchanged for the craziest of nights out if you know where to look.
Sadly, I do seem to need to explain to HSBC that bad behaviour isn’t caused by crypto. They should understand that because they have done plenty of it without any exposure to “virtual currency products” at HSBC think that the following scene might play out in the shadows all around the world: