HSBC Terminates Crypto Investments using its Credit Cards
HSBC, a London-based Behemoth bank, announced that users would no longer be able to obtain crypto using the institution’s credit card. The bank planned to effect these changes by February 23, 2023. According to the bank, the decision was based on the fact that digital currencies can be risky to investors in the long term.
The FCA’s Warning
The Financial Conduct Authority (FCA) issued a stern warning against crypto investments. The notice largely contributed to HSBC’s reversal of using their credit cards to purchase cryptocurrencies.
The ordeal began when FCA decided to investigate unregistered crypto ATMs in Leeds. The exercise occurred in mid-Feb 2023 and was a joint operation activity with the West Yorkshire Police. A senior executive at the FCA admitted many digital asset ATMs are operating illegally in the UK. As such, FCA plans to use its power to identify and take action against any unlawful crypto business within the country.
According to the FCA, cryptocurrency businesses must be registered for AML purposes. This step will help in solving money laundering and other financial-related crimes. On the same notice, the regulatory body affirmed that investors should be ready for losses since cryptocurrencies are unregulated and highly risky.
HSBC used a similar argument, pointing out that consumers may not receive protection from the Financial Services Compensation Scheme or the Financial Ombudsman Service if things go south.
Scrutinizing Crypto Businesses and ATMs
A cyber team at the West Yorkshire Police managed to identify the locations of various live crypto ATMs. Cease and desist orders were issued to several ATM operators after the authorities gathered their intelligence. According to the intelligence unit, the authorities would open an investigation under money laundering policies if these operators breached the provisions set.
The FCA continues collaborating with other enforcement partners to halt illegal crypto ATMs in the UK. Based on their arguments, the FCA believes that most UK firms aren’t registered to host crypto ATM services. This issue led to a series of warnings to businesses and operators, ordering them to close their crypto ATMs or face legal action.
A Change of Heart?
In September 2022, HSBC said it wouldn’t look into the digital currency industry. At the time, the institution’s view on cryptocurrencies differed as the CEO expressed concerns about the sustainability of virtual assets.
Essentially, the CEO viewed Bitcoin as more of an asset than a payment instrument. The bank was reluctant to engage with digital currencies over the years, with claims that cryptos are highly volatile to customers.
HSBC changed its tone in 2023 after announcing that it would venture into the digital currency world. Currently, it hopes to hire a Product Director who will be responsible for discovering tokenization use cases.
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