“Bitfinex is now banking with HSBC through a private account of Global Trading Solutions. Very good fit if you ask me. It’s also worth mentioning that all EUR, JPY and GBP deposits are paused but Bitfinex ‘expects the situation to normalize within a week’” Cermak said.
It is mentioned, that Bitfinex -being one of the oldest cryptocurrency exchanges- has experienced some of the most difficult challenges in the exchange market, especially before giant cryptocurrency markets like Japan, South Korea, and the U.S offered clarity on cryptocurrency regulation.
It is reported that the market had witnessed earlier exchange conflict between Bitfinex and Taiwanese banks, where in April 2017, the Bitfinex initiated a lawsuit against Wells Fargo- a US-based banking giant, as the latter blocked deposits to the banking account of Bitfinex, and disrupted business operations.
In its turn, Bitfinex commented saying “The decision to initiate legal action is because we cannot allow precedents in this industry where clearing houses 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 moved out of Taiwan after that and relocated to the Caribbean and in May, Bloomberg reported that the exchange partnered with Noble Bank for processing its clients’ transactions.
On the other hand, Noble Bank has announced to file for bankruptcy following an in-principle deal to restructure the debt in January, which means the only banking partner of Bitfinex vanished.
Bitfinex and HSBC May Change the Game!
HSBC , which is a $133 billion banking giant based in London, is considered to be the first proper banking partner Bitfinex obtained since Wells Fargo in 2017.
Market analysts read that If the deal between Bitfinex and HSBC can be sustained over the long-term, it will help stabilize the operations of Bitfinex to a specific extent, which the exchange had failed to secure over the past four years.
Kasper Rasmussen- director of communications at Bitfinex said in his turn that the company cannot comment on the nature of the partnership between the exchange and HSBC.
“Bitfinex does not, and has never, commented on actual or potential business relationships and this is not subject to change now,” Rasmussen stated.
Financial observers predict 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.
It is worth mentioning in this context that most exchanges in major markets, like Japan and South Korea, have obtained banking services by large financial institutions and commercial banks in their respective countries.
It is expected that provided Bitfinex can sustain its partnership with HSBC, the step will have a positive impact on the stability of the crypto market.