The mega bank HSBC is collaborating with a crypto company

It appears that the famous bank HSBC is collaborating with Fireblocks, a crypto company specializing in custody. 

The news has not been confirmed, so for now it should be considered only a rumor, but it has not been denied either. 

The rumor comes from two anonymous sources familiar with the matter. 

HSBC and the relationship with the crypto market

HSBC Holdings plc, headquartered in London, is one of the world’s largest banking groups, and Europe’s largest bank by capitalization (157.2 billion euros). 

HSBC stands for Hongkong & Shanghai Banking Corporation, a bank founded in Hong Kong as early as 1865. 

It has a turnover of more than $50 billion, and has more than two hundred thousand employees. 

It is therefore a true global behemoth in traditional finance, and evidently is also interested in providing crypto services. 

HSBC’s stock is listed on both the London (HSBA) and New York (HSBC) stock exchanges, and in recent days it has been gaining nearly 5%. 

Current values of around £600 are in line with those of December 2019, and are close to the highs reached after the March 2020 collapse due to the onset of the pandemic. 

However, in the past, in January 2001, HSBC’s share price approached £1,000, so the current level is not much more than half the all-time highs touched more than+ twenty years ago. 

The company Fireblocks

Fireblocks deals with crypto custody, with its non-custodial wallet-as-a-service dedicated to companies and institutions. 

HSBC’s choice probably fell on Fireblocks both for crypto fund management needs and for the institutional level of service provided. 

The technology used is so-called multi-party computation (MPC), through which it had already managed to gather other banking partnerships as well. 

For example, at the beginning of 2021 it became the provider of crypto custody instruments for BNY Mellon, and later made agreements with BNP Paribas as well.

So this would not be particularly strange news, except that with this partnership the British giant does indeed seem to want to enter the crypto sector in a major way. 

Is HSBC thinking about crypto custody?

Of all the problems posed by cryptocurrency innovation, that of custody is probably the most important, especially when it comes to services offered by real institutions. 

Guarding cryptocurrencies is not the easiest, and it is never without risk. 

An institution like HSBC cannot afford to take such risks, which is why it needs technical solutions that minimize risks. 

Moreover, it is quite likely that a bank’s customers will opt to leave the responsibility of cryptocurrency custody with the bank itself, just as they do with fiat currencies, and this shifts the problem from the banks’ customers to the banks themselves. 

The fact is that the private keys, or seeds, of crypto wallets are stolen or lost there is a real risk of losing all the cryptocurrencies stored in them as well. 

If banks want to offer crypto services to their customers, they must necessarily also offer them a secure safekeeping service, not least because many bank customers are unlikely to opt for self-custody. 

Hong Kong

With regard to HSBC in particular, there is also the Hong Kong issue.

For example, the bank owns Hang Seng Bank, which in turn controls the company that issues the official index of the Hong Kong stock exchange (Hang Seng, to be exact). 

Hong Kong has recently been opening up to cryptocurrencies, and this dictates that the Hong Kong Stock Exchange itself must also open up. 

It is possible that in such an environment, the HSBC Group has decided to enter the crypto sector by providing services to those who want to buy, sell or store cryptocurrencies, including specifically in Hong Kong. 

According to many, the Hong Kong opening is just China’s first step toward a wider and more widespread opening, and this could mean that the crypto services business in Hong Kong could explode in the not-too-distant future.