HSBC, Europe’s largest bank by total assets, has announced that it will be offering custody services for tokenized securities, becoming the latest major institution to embrace digital assets. The British bank is using technology from Swiss crypto custody firm Metaco, which was recently acquired by blockchain startup Ripple, to store bonds and other securities.
According to HSBC, the service will complement its HSBC Orion platform for issuing digital assets and a recently-launched offering for tokenized physical gold. The bank will use its platform for institutions, Harmonize, to help unify security and management of digital asset operations.
This move by HSBC follows in the footsteps of U.S. banking giant BNY Mellon, which announced a similar move in 2021. Tokenized securities are regulated assets, such as bonds and equities, in the form of tokens issued on a blockchain. Blockchain technology is essentially a shared ledger on which assets are recorded digitally, and it is the foundation upon which bitcoin was built.
In the case of banks, institutions are leveraging blockchain for payments, trading, and other purposes, often without a digital token being involved. Banks are finding utility in tokens by digitizing equities, bonds, and other assets.
Zhu Kuang Lee, chief digital, data and innovation officer for securities services at HSBC, noted that the bank is “seeing increasing demand for custody and fund administration of digital assets from asset managers and asset owners, as this market continues to evolve.”
Metaco CEO Adrien Treccani expressed that the partnership reinforces “continued momentum working with top tier financial institutions.” This announcement marks another step by HSBC toward embracing digital assets, following its decision to allow its Hong Kong clients to trade in bitcoin and ether exchange-traded funds. With approximately $3 trillion in assets globally, HSBC is making significant moves in the digital asset space.
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