HSBC offers crypto-derivative products in Hong Kong

abdelaziz Fathi

HSBC Hong Kong, a division of the Hong Kong and Shanghai Banking Corporation, has introduced its inaugural cryptocurrency offerings. This move makes the UK-headquartered banking giant the first lender in Hong Kong to allow its customers to buy crypto-derivative products.

According to a report by local journalist Colin Wu on June 26, HSBC HK now permits its customers to purchase and sell exchange-traded funds (ETFs) based on Bitcoin and Ethereum.

The bank will provide cryptocurrency ETFs that are listed on the Hong Kong Exchange (HKEX), which currently features three investment vehicles: the CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF, and Samsung Bitcoin Futures Active ETF.

This strategic move by HSBC aims to enhance the exposure of cryptocurrencies among its local clientele in Hong Kong. As of March 2022, the lender reportedly boasted approximately 1.7 million active mobile customers, with nearly 95% of its retail transactions conducted online.

Apart from these novel cryptocurrency services, HSBC has reportedly established the Virtual Asset Investor Education Center. This initiative seeks to educate and safeguard investors against the risks associated with cryptocurrencies.

Accessible through various virtual asset-related products such as the HSBC HK Easy Invest app, HSBC HK Mobile Banking app, and online banking platform, this education center serves as an additional resource for investors. Before customers can begin investing, they must read and acknowledge educational materials and risk disclosures.

Hong Kong’s banking regulator was actively urging banks in the city-state to consider accepting cryptocurrency exchanges as clients, a notable departure from regulatory approaches in other jurisdictions.

According to a Financial Times report, the Hong Kong Monetary Authority (HKMA) has exerted pressure on prominent banks such as HSBC and Standard Chartered to take on crypto exchanges as their clients. Despite regulatory crackdowns in other parts of the world, the HKMA says it aims to create a more inclusive environment for the growth of the crypto sector in the region.

During a recent meeting, Hong Kong’s banking regulator reportedly questioned UK-based firms and the Bank of China about their reluctance to establish relationships with cryptocurrency exchanges. Additionally, in a circular dated April 27, HKMA advised banking institutions not to place an excessive burden on potential clients, particularly those looking to establish a presence in Hong Kong, during the due diligence process.

According to the document, the watchdog explicitly mandated financial institutions to assist cryptocurrency firms, referred to as “virtual asset service providers,” in obtaining access to banking services.

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