Bitfinex Partners with HSBC to Hit Back at Insolvency Claims

Bitfinex Partners with HSBC to Hit Back at Insolvency Claims

Bitfinex is one of the world’s oldest, largest, and best cryptocurrency exchanges. It is also one of the most controversial. Some of this comes with the territory. In 2012, when Bitfinex was founded, blockchain technology and governmental regulation were a whisper of their current sophistication. In the subsequent years, Bitfinex has had to evolve to meet the needs of its growing user base, and to turn itself from a fringe tech startup into a credible financial entity. For this latter purpose, traditional banking partnerships must be made… and this has been a sore point for Bitfinex.

Bitfinex’s last formal banking partnership was with Wells Fargo, in mid-2017. Bitfinex’s banking needs are basically twofold:

1) Bitfinex accepts fiat currency (USD, EUR, JPY, GBP), allowing users to buy Bitcoin and other digital currencies. This money must be safely stored, especially that which belongs to clients.

2) Bitfinex owns Tether USDT, the stable coin pegged at $1 per coin. Bitfinex has always claimed to have 1 literal dollar for every USDT coin issued, but they have never been able to formally prove this. To say that the crypto trading public has been sceptical of this claim is to put it mildly.

HSBC is an international banking corporation valued at over $133 billion. Access to this level of capital means Bitfinex and its various ventures are likely bankrolled for the foreseeable future. It also speaks to a new level of client fiat storage security, and may even indicate a new era of verifiable solvency for Tether. Granted, it’s also possible that Tether may still be secured using a fractional reserve system – but even this, with HSBC, would be an improvement.

Are Insolvency Rumours Really a Problem For Bitfinex?

If you were to take online discussion about Bitfinex insolvency at face value, you might conclude that the exchange and its stable coin, Tether USDT, are in trouble. The numbers don’t reflect this narrative, though. Bitfinex has daily volume above $200 million, making it one of the industry’s top ten brokers. Bitfinex remains one of the world’s most reliable and intuitive platforms. And despite persistent reports of shady dealings, Bitfinex hasn’t had a major hack in more than 2 years. Generally speaking, Bitfinex works just like you’d hope it would.

The news of a partnership between Bitfinex and HSBC should be good news to the market at large. Even though assumptions have been made in the past about Bitfinex’s financial solvency, the exchange remains a stable force in the market. Increased legitimacy on the part of Bitfinex is good for the entire market. And any method that strengthens Tether (the world’s 8th most valuable digital currency!) should be celebrated by all crypto enthusiasts, no matter your previous notions on the subject.

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