Users of HSBC's digital trading website cannot buy shares in business analytics company MicroStrategy Inc., the bank said in a message to clients, in an attempt to mitigate risk associated with "virtual currency products."
While HSBC allows the holding and sale of MicroStrategy shares, users of the bank's InvestDirect online service will not be able to expand their stake in the company led by American bitcoin evangelist Michael Saylor, Reuters reported Monday.
"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)," a statement from the bank read.
InvestDirect is available to HSBC clients in Canada and the UK; the service shuttered its operations in India in 2013.
Like many companies including Tesla Inc., MicroStrategy recently added swathes of different cryptocurrencies to its treasury. The business claims to be in possession of roughly 91,579 bitcoins worth more than $5.5 billion in all.
While the Hong Kong founded, London-headquartered bank is taking a firm stance against bitcoin and other cryptocurrencies, many other financial institutions have moved in the opposite direction.
Morgan Stanley and Goldman Sachs both offer bitcoin as an asset class available to investment clients, while payments company Visa announced earlier this month that it will begin accepting cryptocurrencies to settle debts.
Analysts expect institutional interest to continue to rise.
"Assuming the current drift downwards in bitcoin volatility ...continues, there would be positive implications both in terms of institutional adoption going forward and in terms of bitcoin's fair value," a JP Morgan global markets strategy report published last week said.
Mastercard, Paypal and Blackrock all started using digital currencies this year, preempting a massive surge in demand for bitcoin and pushing the coin's value to a high of nearly $61,000 in March.
"Realistically, the currency could aim even higher based on its impressive 2021 performance thus far," eToro analyst Simon Peters told Business Times in an interview.