Bitfinex Joins Hands with HSBC -Bitfinex, a Hong Kong-based heavily-used crypto exchange, now has a banking partner: HSBC, the 7th largest bank in the world. Larry Cermak, a former editor at Diar and head analyst at ‘The Block’ tweeted on Saturday morning to reveal this development.
The Block later issued a full-fledged report on the matter, highlighting the details that are known and what is still unknown about the relationship between HSBC and Bitfinex.
It was explained that HSBC had brought on Bitfinex through a private account via Global Trading Solutions. But due to the nature of the account type, it remains unclear whether HSBC’s top brass formally approved the startup onboarding as a client.
This news comes after Wells Fargo, a US-based banking giant, dropped the exchange in early 2017. Which came as a blow to the startup’s legitimacy, business, and most importantly, the ecosystem surrounding it. That is now ancient history as the crypto exchange has partnered with such a well-established bank. This is indeed a positive sign for the startup itself, and, of course, the crypto industry as a whole.
As one of the oldest cryptocurrency exchanges, Bitfinex has experienced some of the most difficult challenges. Which an exchange could face, particularly before major cryptocurrency markets like Japan, South Korea, and the US. Who offered clarity on cryptocurrency regulations.
The exchange ran into conflict with Taiwanese banks. In April 2017, Bitfinex initiated a lawsuit against Wells Fargo, for blocking deposits to the banking account of Bitfinex and disrupting operations of the business.
Bitfinex Joins Hands with HSBC-“The decision to initiate legal action is because we cannot allow precedents in this industry where clearinghouses can disrupt businesses that are by all metrics complying with the rules in place. If we allow them to simply flip a switch and disrupt business, then there becomes a precedent in the bitcoin industry beyond just Bitfinex, so we believe it is the appropriate time to take action,” Bitfinex said at the time.
Since then, Bitfinex has moved out of Taiwan and relocated to the Caribbean. In May, Bloomberg reported that the exchange partnered with Noble Bank to process transactions sent by its clients. However, in January, Noble Bank announced to file for bankruptcy following an in-principle deal to restructure debt and with that decision. Which has the only banking partner of Bitfinex vanished.
HSBC is really the first proper banking partner Bitfinex has obtained since Wells Fargo in 2017. It is highly probable that the exchange, with strict, Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements, obtained the banking service of HSBC through a strictly regulated channel.
If the partnership between Bitfinex and HSBC can be sustained for the long-term, it will bring a level of stability to the operations of Bitfinex which the exchange hasn’t been able to secure in the past four years. It will also have a positive impact on the stability of the entire crypto market.