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HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

reuters.com

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Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#61

Post by jariel »

kolinko wrote: post #54
CynicusRex wrote: post #51

That makes it sounds as if it's a bad thing. Instead read it like “HSBC bans customers from buying pyramid-scheme-backer MicroStrategy shares”.

It's not HSBC's role to decide which things are pyramid schemes. SEC is for that, and they have made it very clear that neither Bitcoin or Ethereum are one.

"It's not HSBC's role to decide which things are pyramid schemes."

Yes it is. It's the job of banks to advise on these things.

It is a peculiar position they've taken, they've gone further than I think they'd have to, there's probably some reason for it that won't be very obvious on a non-financial forum.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#62

Post by goatinaboat »

wutXthree wrote: post #55
revel wrote: post #40

Earlier quoted context omitted.

They already have a version of Net Neutrality for brokers: reg NMS. HSBC are well within their rights to refuse to accept bad orders. HSBC are exposed to specific regulatory risk not shared by US banks. Having a ton of customers go bust because a regulatory change nuked some meme stocks seems undesirable to me. If you don't like it you can always find another broker.

Why would an exchange allow a "meme stock"?

MicroStrategy has been around since the 80s hasn't it? I thought they made business intelligence software. They are not some weird company that appeared overnight out of nowhere.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#63

Post by the_local_host »

wutXthree wrote: post #56
the_local_host wrote: post #29

Earlier quoted context omitted.

If they're concerned about exposure, they could simply set the margin trading leverage below 1 (e.g. offering 0.1x leverage so that customers have to post $10 in margin to buy $1 in MicroStrategy shares).

Are you saying someone would need to post more than the value of the share?

> Are you saying someone would need to post more than the value of the share?

Yes, as an alternative to not allowing the trade.

If the bank considers something highly risky, it makes sense to protect themselves and the customer by making sure they've got some money locked up outside of the trade (a bankrupt customer is no longer a customer, after all). It would basically cap the percentage of net worth that they could put at risk, where they'd need to have $10 set aside for every $1 in the risky position.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#64

Post by londons_explore »

BelenusMordred wrote: post #45
elliekelly wrote: post #15

Earlier quoted context omitted.

Knowing absolutely nothing about this particular situation I’d be willing to bet this decision is a lingering side effect of HSBC’s most recent (and seemingly perpetual) AML issues. I suspect they’re trying to appear squeaky clean and an action like this is quick, easy to implement operationally, and looks good to regulators who are uneasy about cryptocurrency’s reputation for facilitating criminal activity online.

I don't see how kyc/aml applies to this particular stock over every single other ticker they will happily sell you? There's no difference, they aren't selling cryptocurrency here.

Buying or shorting this stock to the tune of billions of dollars might be a good way for a drug dealer to mitigate the currency fluctuation risk to his big pile of illicit bitcoins stashed under his bed.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#65

Post by powerapple »

revel wrote: post #40
Someone1234 wrote: post #4

> “HSBC has no appetite for direct exposure to virtual currencies and limited appetite to facilitate products or securities that derive their value from VCs (virtual currencies),” HSBC said in a statement. But you wouldn't be? This is a product literally called "InvestDirect" where private individuals are buying stocks and assuming all the risk. If you don't want to offer margin on virtual currency products, more pow…

They already have a version of Net Neutrality for brokers: reg NMS. HSBC are well within their rights to refuse to accept bad orders. HSBC are exposed to specific regulatory risk not shared by US banks. Having a ton of customers go bust because a regulatory change nuked some meme stocks seems undesirable to me. If you don't like it you can always find another broker.

HSBC does a lot money laundry for rich people around the world, and now it is worrying about risks? I don't think so. But it is a telling for potential direction of US government is taking for bitcoin. HSBC is doing many things to please the US government, this may be one of them.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#66

Post by listenallyall »

xiphias2 wrote: post #59
listenallyall wrote: post #53

Earlier quoted context omitted.

"Better" like Robinhood, which, instead of firmly stating a position in advance, changes its mind day-by-day about which stocks its customers can buy or sell? And which was pretty damn close to going bankrupt earlier this year because it didn't have a sufficient risk management policy?

Interactive Brokers and Saxo are good options for example in UK. I think RobinHood is US only, but US has more professional brokers as well.

I guess you and I have different opinions on what makes a "better" broker. I'm in favor of clearly-defined policies that anticipate certain events, which are communicated to all customers far in advance, so customers can make an informed decision whether or not to patronize that particular company. You seem to be happy with firms like IBKR which might decide, mid-day, at the peak of volatility, to lock out its customers from trading certain securities, without any advance notice or warning.

https://www.investopedia.com/robinhood-latest-broker-to-rest...

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#67

Post by AnthonyMouse »

BelenusMordred wrote: post #45
elliekelly wrote: post #15

Earlier quoted context omitted.

Knowing absolutely nothing about this particular situation I’d be willing to bet this decision is a lingering side effect of HSBC’s most recent (and seemingly perpetual) AML issues. I suspect they’re trying to appear squeaky clean and an action like this is quick, easy to implement operationally, and looks good to regulators who are uneasy about cryptocurrency’s reputation for facilitating criminal activity online.

I don't see how kyc/aml applies to this particular stock over every single other ticker they will happily sell you? There's no difference, they aren't selling cryptocurrency here.

> I don't see how kyc/aml applies to this particular stock over every single other ticker they will happily sell you? There's no difference, they aren't selling cryptocurrency here.

It's the equivalent of security theater. Do something conspicuous that they can spin as having done something about the problem. That serves their purpose regardless of whether it actually does any good or makes any sense.

On top of that, cryptocurrency kind of competes with banks, so they have an excuse to cause trouble for the competition.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#68

Post by jamespo »

kolinko wrote: post #52
revel wrote: post #40

Earlier quoted context omitted.

They already have a version of Net Neutrality for brokers: reg NMS. HSBC are well within their rights to refuse to accept bad orders. HSBC are exposed to specific regulatory risk not shared by US banks. Having a ton of customers go bust because a regulatory change nuked some meme stocks seems undesirable to me. If you don't like it you can always find another broker.

> If you don't like it you can find another broker It's like saying that net neutrality exists, because "if you don't like throttling you can find another ISP"

There are a lot more brokers available than ISPs

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#69

Post by dna_polymerase »

powerapple wrote: post #65
revel wrote: post #40

Earlier quoted context omitted.

They already have a version of Net Neutrality for brokers: reg NMS. HSBC are well within their rights to refuse to accept bad orders. HSBC are exposed to specific regulatory risk not shared by US banks. Having a ton of customers go bust because a regulatory change nuked some meme stocks seems undesirable to me. If you don't like it you can always find another broker.

HSBC does a lot money laundry for rich people around the world, and now it is worrying about risks? I don't think so. But it is a telling for potential direction of US government is taking for bitcoin. HSBC is doing many things to please the US government, this may be one of them.

> HSBC does a lot money laundry for rich people around the world, and now it is worrying about risks?

Says a lot about the 'risks' involved with that business model.

Re: HSBC bans customers from buying Bitcoin-backer MicroStrategy shares

#70

Post by noxer »

mullingitover wrote: post #34
rawtxapp wrote: post #19

Next up, they'll have to ban Tesla, Square, Coinbase, Riot, etc. Where will they draw the line? Pretty much the whole market has exposure to Bitcoin through SP500->Tesla at this point.

Tesla has a market cap of 673.80B at the moment. Their BTC holdings are barely a rounding error.

Comparing their asset balance with the market cap of its stock is complete nonsense.

Tesla has 100% access to the BTCs and other asset it holds but there is no access to the market cap. Its a fictive price tag on all existing shares. People use it to compare companies. The money does not exist anywhere and certainly can not be used by Tesla.

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