Major global banking institution HSBC is set to introduce a comprehensive institutional custody platform for tokenized securities, popularly known as security tokens. The move signifies HSBC’s commitment to embracing the evolving landscape of digital assets and catering to the increasing demand for custody and fund administration of these assets from asset managers and owners.
On November 8, HSBC announced its strategic partnership with Metaco, a tech firm owned by Ripple, to integrate its institutional platform, Harmonize, with HSBC’s upcoming custody service for digital assets. The digital asset custody service is expected to be rolled out in 2024, adding to HSBC’s existing suite of digital asset offerings.
The bank’s digital asset ecosystem also includes HSBC Orion, a platform for digital asset issuance, and its recent offering for tokenized physical gold, launched on November 1, 2023. Together, these services are designed to create a comprehensive digital asset solution for HSBC’s institutional clients, catering to their growing needs in the realm of digital finance.
John O’Neill, HSBC’s Global Head of Digital Assets Strategy, highlighted the significance of these services in fostering the development of digital asset markets. He emphasized HSBC’s commitment to providing a secure and efficient ecosystem for institutional investors looking to engage with digital assets.
HSBC’s journey into digital asset custody is driven by the evolving landscape and the increasing importance of innovation in the asset servicing industry. Zhu Kuang Lee, HSBC’s Head of Digital, Data, and Innovation, underlined the ever-evolving nature of the digital asset market and the necessity for asset servicers to stay at the forefront of innovation.
It’s worth noting that HSBC’s upcoming digital asset custody platform is specifically designed for institutional investors and will exclusively cover security tokens. It will not include cryptocurrencies like Bitcoin or stablecoins like Tether. Unlike cryptocurrencies, security tokens are digital representations of securities issued and transferred on the blockchain. This focus on security tokens aligns with HSBC’s commitment to providing a secure and regulated environment for its institutional clients.
HSBC’s venture into tokenized securities is not its first foray into the blockchain and cryptocurrency industry. In November 2021, the bank announced a successful trial of tokenized deposits in collaboration with Ant Group, a major Chinese financial services provider. This demonstrates HSBC’s proactive approach to exploring innovative solutions in the financial sector.
HSBC’s partnership with Metaco and its upcoming security token custody platform marks another significant step towards the mainstream adoption of digital assets in the traditional financial sector. As institutional interest in digital assets continues to grow, this move positions HSBC as a key player in providing the necessary infrastructure and services for institutional investors to securely manage and transact digital securities.