Banks and the cryptocurrency world have been at odds ever since the latter emerged a decade ago. From initially shrugging decentralized currency off as a mere distraction, now the disruptive force has irked the banking industry with the seventh largest bank in the world, HSBC rumored to be halting cryptocurrency transactions.
Hong Kong and Shanghai Banking Corporation [HSBC], the British multinational financial services giant is purportedly engaging in blocking all transactions related to cryptocurrencies. According to cited sources the reason behind this “censorship,” is because virtual currencies are “volatile.”
According to a Reddit thread by a BlockHeart357 titled, “HSBC Apparently Blocking All Crypto Purchases…?” the author details his conversation with a “customer service agent” of the bank. The author stated that prior to this incident, crypto purchases were carried out “without any major issues,” but then, out of the blue, his card got ‘blocked.’
“I come to find out that HSBC now seems to be blocking crypto transactions on all cards, even debit.”
The conversation with the agent attested to HSBC blocking crypto transactions due to the “especially volatile” nature of the underlying assets. The agent reiterated that “for these kinds of transactions,” referring to those pertaining to decentralized currency, the bank had decided to ‘block’ the card of the author in question.
A furious BlackHeart357 stated,
“So what the fuck is my alternative now? Go to a new bank, have to open an entirely new account, all that shit, just to potentially run into the same issue? Go to a Bitcoin ATM and pay an exorbitant percentage fee that is basically thievery? This is horseshit.”
Another inkling of the HSBC-crypto-block was revealed by a Trenton Gaddis, attested to the same, tweeting,
Long $BTC, short HSBC
HSBC now seems to be blocking crypto transactions on all cards, even debit. At least, that’s what the customer service agent told me.
Well, HSBC has decided to not allow this kind of transaction because cryptocurrency is volatilehttps://t.co/PpPkE23vI8
— Trenton Gaddis (@DDGaddis) June 1, 2019
Ambcrypto reached out to HSBC regarding the matter and are awaiting a reply.
Several banks have engaged in issuing threatening notices to customers who transact cryptocurrencies and outrightly blocking them as well. Recently, the Indian private lending financial institution HDFC [Housing Development Finance Corporation Ltd] issued “threatening” e-mails to customers purchasing cryptocurrencies.
HDFC, in the notice, told the customer to “clarify” the nature of transactions within a 30-day period, failing which the account would be ‘frozen.’
Another Indian bank, Kotak Mahindra stated that a customer’s Credit Card would be blocked if the bank account was used in the purchase or sale of virtual currencies.
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ErisX goes all hands on deck to launch a Bitcoin Futures market
ErisX’s CSO, Matt Trudeau, detailed the company’s four important plans for the future, which includes launching a spot market, to secure a Bit License, DCO, and to launch a futures market.
ErisX currently has a DCM contract, which is a Derivative Contract Market that allows ErisX to run a CFTC-regulated futures exchange. However, ErisX aims to get a DCO [Derivatives Organization], which will effectively allow it to run a CFTC-regulated clearinghouse. A clearinghouse would mean that ErisX can take control of the custody of the assets and clear and settled trades.
The CSO explained the benefit of this, stating,
“There is some efficiency for firms like producers [like mining companies]; if they need to hedge their inventory or need liquidity on a spot market, they could do that conveniently on a single platform. “
Trudeau added that from the “post-trade standpoint” and “the collateral management standpoint,” ErisX would have cash, crypto, and the futures, all stored in their clearinghouse. This would boost efficiency since it would be available for all customers under a single platform. The CSO added,
“… so there is some efficiency in terms of managing collateral, if you don’t have assets on multiple platforms, it can all be in our clearinghouse.”
Apart from the aforementioned plans, Trudeau added that the crypto-industry needs to mature more and that ErisX plans to make a significant contribution to that. He added,
“The market is professionalizing and we think that in terms of what institutions are expecting from a trading/custody experience, we will bring some of the solutions to the market and that’s really the foundational pieces that they are looking in order to build their businesses on top of us.”
Apart from ErisX, LedgerX has also received a go-sign from the CFTC to settle Bitcoin Futures in Bitcoins. Other exchanges include Intercontinental Exchange’s Bakkt and Seed CX.
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