An HSBC executive has said that the bank’s blockchain-based system has helped it cut the costs of settling foreign exchange trades.
Speaking to Reuters, Mark Williamson, chief operating officer of FX cash trading and risk management, who oversees the blockchain project, said that its HSBC FX Everywhere platform saved it 25 percent as compared with traditional methods.
Last month, the bank announced it had settled more than $250 billion in transactions using its HSBC FX Everywhere platform.
It said then that it had settled 3 million foreign exchange transactions and made a further 150,000 payments over the digital ledger system, which it has been using over the last year “to orchestrate payments across HSBC’s internal balance sheets.”
In the Reuters report, Williamson said that HSBC processes from 3,500 to 5,000 trades a day on FX Everywhere, with trades now being worth $350 billion.
“We’re able to demonstrate that this is not a one-off proof of concept or just one or two trades,” Williamson said.
Reuters further quoted him as saying that a “significant” amount of internal money flows are likely to be settled on the DLT system.
HSBC has been experimenting wit blockchain for some time. Since joining blockchain consortium startup R3 in 2015, it has teamed up with Bank of America and the Singapore government on a blockchain supply chain trial
It’s also joined work on the Utility Settlement Coin (USC) project, designed to make it easier for global banks to conduct a variety of transactions with each other using collateralized assets on a custom-built blockchain.
If the project is approved by Spanish regulators, 5 million Tabu tokens will be put up for sale.
Famous French whistleblower Hervé Falciani is going to be launching a new cryptocurrency according to a Reuters report published on Friday.
Called Tabu, Falciani hopes that the new token will be picked up by regulatory authorities and used as a means of ensuring money is clean and transactions are not conducted fraudulently.
Falciani says he has 5 million Tabu tokens, worth 2 million Euros ($2.3 million), that will be offered to investors once the National Securities Market Commission, Spain’s financial regulator, gives the project its approval.
The project has managed to raise 1.3 million Euros ($1.47 million) thus far but needs the additional 2 million euros to ensure that it can succeed. Tabu was created by Tactical Whistleblowers, a non-profit organisation which Falciani founded.
Based in Valencia, the organisation includes a number of academics, mostly mathematicians, from the Valencia Polytechnic University in eastern Spain.
Blockchain for government
Alongside his cryptocurrency project, Falciani plans on launching a blockchain system that can be used to authenticate government procurement contracts.
Across the globe, such contracts are regularly used as a means of putting money into the pockets of corrupt government officials and their buddies in the private sector.
The new system will be called ‘Aletheia,’ which, as our classics-loving readers will already now, is a Greek term which translates to ‘disclosure’ in English.
“Fake information is the basis of any kind of fraud,” Falciani told Reuters. “The same way that we have to deal with fake news, the same technology can [be] applied to fake invoices.”
A former computer programmer with HSBC, Falciani shot to fame in 2008 after he leaked a huge spreadsheet containing the names of 130,000 potential tax evaders.
Fearing extradition to Switzerland, where he faces up to five years in prison, he moved to Spain six years. He was arrested in the summer of last year by local authorities but released shortly afterwards, with a Spanish court saying it does not recognise the charges made against him by the Swiss government.
On Oct. 6, Larry Cermak, former editor at Diar and head analyst at The Block, reported that leading crypto exchange Bitfinex obtained a banking partner in HSBC, a $133 billion banking giant based in London.
“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.
Why is HSBC Accommodating Bitfinex?
As one of the oldest cryptocurrency exchanges, Bitfinex has experienced some of the most difficult challenges an exchange could face, particularly before major cryptocurrency markets like Japan, South Korea, and the US offered clarity on cryptocurrency regulation.
The exchange’s conflict with Taiwanese banks is well-documented, and in April 2017, Bitfinex initiated a lawsuit against Wells Fargo, a US-based banking giant, for blocking deposits to the banking account of Bitfinex and disrupting operations of the business.
“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 said at the time.
Since then, Bitfinex has moved out of Taiwan and relocated to the Caribbean and in May, Bloomberg reported that the exchange partnered with Noble Bank to process transactions sent by its clients.
However, Noble Bank has announced to file for bankruptcy following an in-principle deal to restructure debt in January and with that, the only banking partner of Bitfinex vanished.
HSBC is really the first proper banking partner Bitfinex has obtained since Wells Fargo in 2017. If the deal between Bitfinex and HSBC can be sustained throughout the long-term, it will bring a level of stability to the operations of Bitfinex which the exchange failed to secure in the past four years.
Speaking to The Block, Kasper Rasmussen, director of communications at Bitfinex said that the firm 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.
Given the the $200 million dollar daily trading volume of Bitfinex and the amount of fiat deposits the exchange receives from its international customers, it is not possible for the exchange to unilaterally announce its dependence on HSBC as a banking partner through a private banking account.
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.
Positive Impact on the Industry
Already, 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. If Bitfinex can sustain its partnership with HSBC, it will have a positive impact on the stability of the crypto market.