Bitfinex, One of the Largest Crypto Exchanges in the World Becomes an HSBC Bank Partner
On October 6, Larry Cermak, a former editor at Diar and chief analyst at The Block, reported that Bitfinet's leading crypto exchange gained banking partners at HSBC, a London-based $ 133 billion banking giant.
"Bitfinex is now banking with HSBC through the Global Trading Solutions personal account. It is suitable if you ask me. It is also worth mentioning that all EUR, JPY and GBP sets are paused, but Bitfinex "estimates the situation will be normal in one week", said Cermak
Why does HSBC accommodate Bitfinex?
As one of the oldest cryptocurrency exchanges, Bitfinex has experienced some of the most difficult challenges the exchange can face, especially before major currency markets such as Japan, South Korea and the US offer clarity on cryptocurrency regulation.
Exchange conflicts with Taiwanese banks were well documented, and in April 2017, Bitfinex began a lawsuit against Wells Fargo, a US-based banking giant, for blocking deposits to a Bitfinex banking account and disrupting business operations.
"The decision to initiate legal action is because we cannot allow precedents in this industry where clearing houses can interfere with businesses which by all metrics comply with the rules. If we allow them to simply switch and disrupt business, then there will be a presence in the Bitcoin industry outside of Bitfinex, so we believe this is the right time to take action, "Bitfinex said at the time.
Since then, Bitfinex has moved from Taiwan and moved to the Caribbean and in May, Bloomberg reported that the exchange partnered with Noble Bank to process transactions sent by its clients.
However, Noble Bank has announced to file for bankruptcy following a principle agreement to restructure debt in January and hence, the only Bitfinex banking partner to disappear.
HSBC is truly the right first banking partner that Bitfinex has been acquiring since Fargo wells in 2017. If the agreement between Bitfinex and HSBC can be maintained in the long run, this will bring stability to the Bitfinex operations they have been trying for the past four years.
Speaking to The Block, Kasper Rasmussen, director of communications at Bitfinex said that the company cannot comment on the nature of the partnership between the exchange and HSBC.
"Bitfinex does not, and never does, comment on actual or potential business relationships and this cannot change now," Rasmussen stated.
Given Bitfinex's daily trading volume of $ 200 million and the fiat deposit received by the exchange from its international customers, it is not possible for the exchange to unilaterally announce its dependence on HSBC as a banking partner through a private banking account.
It is possible that exchanges, with the terms "Know Your Customer" (KYC) and "Anti-Money Laundring" (AML), obtained HSBC banking services through tightly regulated channels.
Positive Impact on Industry
Already, most exchanges in key markets such as Japan and South Korea have obtained banking services by large financial institutions and commercial banks in their respective countries. If Bitfinex can maintain its partnership with HSBC, this will have a positive impact on the stability of the crypto market.