Big banks have an odd relationship with crypto.
On one hand, most denounce cryptocurrencies like Bitcoin as volatile and risky—some banks going as far as to ban their credit card holders from even buying crypto.
On the other hand, today banks are betting on crypto’s underlying blockchain technology to power future cost savings and tech initiatives.
For example, in the last few days, and following a pilot in May, HSBC announced it will join a blockchain-based trade finance platform in Hong Kong, along with Standard Chartered and 21 other banks.
(For the uninitiated, trade financing is when banks remove payment risk for exporters and importers as products get shipped around the world, and it’s an industry famously old-fashioned and paper-based.)
So how does the world’s seventh-biggest bank HSBC think about cryptocurrencies and blockchain technologies?
Forbes sat down with HSBC’s Global Head of Digital, Josh Bottomley, earlier this month to find out.
Bottomley joined HSBC from Google, where he led the search giant’s display advertising arm. Today he manages HSBC’s entire digital strategy for both its retail and wealth management arms.
“We are cautious looking into this area,” he says, when I ask about the bank’s approach to crypto.
There’s a use case when you have a token or currency that’s actually useful for a particular purpose, and it serves that need.”
In the last year a booming ICO economy—widely reported to have exceeded $4 billion in capital raised during 2017 alone—made it clear that there is huge demand for digital tokens designed to power future digital services, although few of those services have yet been built.
“But that is very different to if it’s pure speculation,” Bottomley says, referring to mainstream cryptocurrencies like Bitcoin and Ethereum.
Right now we’re not interested in that at all.”
But where does speculation, say around bitcoin, become a genuine investment asset for a bank like HSBC?
“We don’t broadly believe that’s the case now, but it might change,” Bottomley says.
“One of the criteria we use is if an asset class is showing incredible volatility up and down. For the vast majority of our customers, that makes it an inappropriate saving or investment vehicle.”
Just last month the Bank of England wrote to the bosses of Britain’s biggest banks to warn them to be prudent against the “reputational risks” of cryptocurrencies.
For now, at least, it seems HSBC and Bottomley’s digital strategy for the bank will both continue to take that warning to heart.
An HSBC spokesperson told Forbes: “HSBC does not trade cryptocurrencies nor do we process payments denominated in virtual or cryptocurrencies.”