Spontaneous or treatment induced seroconversion in chronic HBV infection is rare and generation of anti-HBs antibodies is the current goal of HBV therapeutics. Here we investigated B and follicular T helper (Tfh) cell defects that persist in HBV infection despite long-term nucleos(t)ide analog (NUC) treatment and possible mechanisms behind them. RNA sequencing revealed that patient B cells have upregulated expression of multiple inhibitory receptors including members of FcRL family and downregulation of genes involved in antigen presentation. An expansion of atypical memory CD19CD10CD27CD21 subset of B cells, that express high levels of FcRL5, is persistently present in patients. HBs antigen specific IgG response is concentrated in classical memory and not in atypical memory subset, confirming dysfunction of this subset. Activated Tfh, which expressed excessive CD40L upon polyclonal stimulation, were present in patients. Incubation of B cells from healthy individuals with HBV core (HBc) or CD40L resulted in induction of inhibitory receptors FcRL4, FcRL5 and PD-1 on CD19+ cells and resulted in altered B cell phenotypes. Mechanistically, HBc binds B cells and causes proliferation specifically of FcRL5+ B cell subset. Our results provide evidence that HBV directly causes upregulation of inhibitory pathways in B cells resulting in an accumulation of atypical B cells that lack anti-HBs function.