The turmoil surrounding Bitcoin intensified on Monday after HSBC said it had no plans to start offering the cryptocurrency to investors.
In an interview with Reuters, the chief executive of Europe’s largest bank, Noel Quinn, pointed to Bitcoin’s volatility and lack of transparency.
He said: “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.
“For similar reasons we’re not rushing into stablecoins.” Stablecoins are digital currencies which are pegged to assets such as the US dollar, in an effort to minimise volatility.
Quinn told Reuters: “I view Bitcoin as more of an asset class than payments vehicle, with very difficult questions about how to value it on the balance sheet of clients because it is so volatile.
“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 organisation is, plus the structure and accessibility of the reserve.”
The comments from Quinn follow a crackdown by China – one of HSBC’s most important markets – on the mining and trading of digital currencies. Last week Beijing banned banks, insurers and payment companies from processing transactions, before the country’s Financial Stability and Development Committee then announced Bitcoin was the one asset it needed to regulate more.
Prior to that, Tesla boss Elon Musk, a prominent supporter of the currency, had tweeted concerns about Bitcoin’s energy use, causing the price to fall heavily.
Musk has since appeared to temper his stance, as well as clarifying that Tesla has not sold any of its Bitcoin holdings.
But that has only partially ease the volatility. Bitcoin has fallen heavily from a peak of around $64,000 in April, and as at 1200 BST was trading around $36,000, although that was an improvement on Sunday’s slide to $32,000.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “It’s become clear Beijing’s stance isn’t a one-off warning but the beginnings of a serious attempt to limit the decentralised power of cryptocurrencies. Another drag on the price could come amid mounting concerns about the amount of energy being used to mind cryptocurrencies.
“The direction of travel is far from clear, as despite the rollercoaster ride, some crypto fans have buckled up and see the recent falls as an opportunity to buy into currencies like Bitcoin at a cheaper price.”