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HSBC severs links with firm behind Bitcoin fund HSBC severs links with firm behind Bitcoin fund
(about 2 hours later)
HSBC has severed ties with the firm behind the world's first regulated Bitcoin investment fund.HSBC has severed ties with the firm behind the world's first regulated Bitcoin investment fund.
Jersey-based hedge fund Global Advisors (GA) claims the bank was worried about "money laundering risk".Jersey-based hedge fund Global Advisors (GA) claims the bank was worried about "money laundering risk".
GA's Daniel Masters told the BBC that the development threatens well publicised plans to make Jersey a global centre for digital currencies.GA's Daniel Masters told the BBC that the development threatens well publicised plans to make Jersey a global centre for digital currencies.
However, HSBC had yet to respond to requests for a comment. HSBC would not discuss individual customers, but said ending a client relationship is never done "lightly".
Mr Masters said both his firm and the Bitcoin fund are tightly regulated.Mr Masters said both his firm and the Bitcoin fund are tightly regulated.
The States of Jersey has created a company called Digital Jersey, in part to foster financial technology.The States of Jersey has created a company called Digital Jersey, in part to foster financial technology.
Island politicians have travelled to Bitcoin conferences to promote Jersey's enthusiasm for digital currencies.Island politicians have travelled to Bitcoin conferences to promote Jersey's enthusiasm for digital currencies.
Mr Masters launched the Global Advisors Bitcoin Investment Fund (GABI) in August after it was certified by the Jersey Financial Services Commission.Mr Masters launched the Global Advisors Bitcoin Investment Fund (GABI) in August after it was certified by the Jersey Financial Services Commission.
He said HSBC's move was a "step in the wrong direction for Jersey".He said HSBC's move was a "step in the wrong direction for Jersey".
Unregulated Bitcoin funds exist elsewhere, but the official approval allowed major investors, such as pension and insurance companies, to speculate on Bitcoin for the first time.Unregulated Bitcoin funds exist elsewhere, but the official approval allowed major investors, such as pension and insurance companies, to speculate on Bitcoin for the first time.
Having his accounts closed by HSBC is only the latest difficulty faced by GABI, said Mr Masters.Having his accounts closed by HSBC is only the latest difficulty faced by GABI, said Mr Masters.
'Money laundering''Money laundering'
He said that when he was launching GABI he could not find any island bank willing to provide services, so took GABI's business elsewhere.He said that when he was launching GABI he could not find any island bank willing to provide services, so took GABI's business elsewhere.
Global Advisors has found another Jersey bank, but GABI's banking is not done on the island, although the fund remains registered and regulated in Jersey.Global Advisors has found another Jersey bank, but GABI's banking is not done on the island, although the fund remains registered and regulated in Jersey.
Geoff Cook, chief executive of Jersey Finance, said he could not comment on individual cases, but said GABI reflected Jersey's position "as both a leading hedge fund jurisdiction and a pioneering centre for the rapidly evolving world of fintech (financial technology".Geoff Cook, chief executive of Jersey Finance, said he could not comment on individual cases, but said GABI reflected Jersey's position "as both a leading hedge fund jurisdiction and a pioneering centre for the rapidly evolving world of fintech (financial technology".
There have been issues around the digital currencies, including a lack of regulation and concerns about the potential for money laundering and other illegal activity.There have been issues around the digital currencies, including a lack of regulation and concerns about the potential for money laundering and other illegal activity.
In October 2013 the FBI shut down online marketplace Silk Road, which traded in drugs and other illegal goods and took payments using "crypto-currencies".In October 2013 the FBI shut down online marketplace Silk Road, which traded in drugs and other illegal goods and took payments using "crypto-currencies".
A spokesman for HSBC said: "We do not discuss individual customers, nor do we confirm whether an individual or business is, or has been a customer."
But he added: "In reviewing our portfolio, we have identified a number of relationships that don't meet our strategic criteria.
"We don't take the commercial decision to end a customer relationship lightly, and when we do so it follows careful consideration of that relationship in light of our strategic focus or global risk management standards."