Global Advisors, a firm based in Jersey that manages the first regulated bitcoin fund, has been served notice by its bank, HSBC.
The firm said it received a notice from HSBC indicating that the company’s bank account would be closed in 60 days. A meeting with HSBC personnel at the firm’s office in Jersey revealed that the bank feared Global Advisors’ account was at risk of potential money laundering.
“We heard that our risk profile is not really happening for them,” said Jean-Marie Mognetti, a partner with the firm.
Invested funds unaffected
Mognetti stressed that the HSBC account being closed does not affect client funds invested in the Global Advisors Bitcoin Investment (GABI) Fund. The affected account is used for Global Advisors’ operations.
Additionally, he said, the Bitcoin Investment Fund’s account is not controlled by Global Advisors, but by an independent administrator, a firm called Moore Management Ltd.
Mognetti declined to say what bank the Bitcoin Investment Fund worked with, citing client privacy. He did however indicate that it was not a bank in Jersey, saying his firm had approached HSBC and other banks on the island when the fund was being set up, only to be turned down by all of them.
“GABI the fund has never banked with HSBC. Nothing within the HSBC story impacts GABI,” Mognetti said.
HSBC would not confirm or deny that Global Advisors held an account with it, saying it does not confirm whether a business is a customer or has been in the past.
The bank told CoinDesk:
“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.”
Banks averse to bitcoin
Firms in the digital currency business globally are facing fierce headwinds in their attempts to obtain banking relationships.
In September, a merchant services firm called CTS that served bitcoin businesses in the Isle of Man, an British Crown dependency like Jersey, was pressured by the banks it worked with to cut ties to its digital currency clients.
Startups dealing in bitcoin in the United States are also struggling to get banking relationships, CoinDesk found in September.
Mognetti declined to speculate on whether HSBC served his firm notice because of its newly launched bitcoin fund.
He did say, however:
“It will come as no surprise to anybody in Jersey involved in bitcoin activity that HSBC is not really pro-bitcoin.”
Targeting bitcoin business
Jersey has moved to establish itself as a bitcoin-friendly jurisdiction. The local regulator’s approval of GABI was seen a harbinger of a new growth engine for the island’s flagging financial services sector. Furthermore, its government has funded a group called Digital Jersey to promote digital currency businesses.
Jersey’s main competition comes from other offshore jurisdictions like the Isle of Man, which has been aggressive in courting digital currency companies, and is even looking into accepting bitcoin payments for taxes and government services.
Featured image via Gyver Chang / Flickr
Hat tip to BBC News
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.