Scheduled to go live in 2024, the custody service is will complement HSBC Orion, which is the bank's London-based platform for digital asset issuance. Additionally, it will integrate with a recently introduced offering for tokenized physical gold. According to coindesk.com, HSBC envisions these platforms collectively forming a comprehensive digital asset solution for institutional clients.
The same source reveals that the move aligns with the broader trend in the financial industry, where banks and financial institutions are increasingly exploring the tokenization of real-world assets (RWA) on various blockchain platforms, including private ledgers and public networks such as Ethereum. Regulatory authorities in Singapore, Japan, the U.K., and Switzerland have recently expressed their intent to test tokenization for fixed income, foreign exchange, and asset management products.
HSBC emphasises that its custody plans are presently centered on tokenized securities issued on third-party platforms, specifying examples such as private and/or public blockchain-compatible tokenized bonds or tokenized structured products. It's worth noting thatt the custody service will not extend to cryptocurrencies or stablecoins.
Officials from HSBC cited by coindesk.com underscored the significance of the new custody service for digital assets. They noted that it would complement HSBC Orion and the recent launch of tokenized physical gold, reinforcing HSBC's dedication to the overall development of digital asset markets.
In September 2023, HSBC had previously collaborated with Fireblocks, which is a custody technology firm. The partnership, involving HSBC's innovation team, aimed to advance the bank's technological capabilities in this domain.
In November 2023, HSBC successfully tested the use of tokenized deposits in partnership with Ant Group in a bid to accelerate the development of corporate treasury management.
Following this announcement, the tokenized deposits were successfully leveraged in intra-group payment transactions in collaboration with Ant Group. The initiative focused on the potential of deposit tokenization in the process of allowing always-on, real-time treasury fund movement between accounts that are held by a corporate in the HSBC network.
In May 2023, US-based crypto solutions provider Ripple acquired Switzerland-based digital asset custody provider Metaco to expand its enterprise offerings.
The acquisition was in line with Ripple’s strategy to diversify into custody solutions and bring new revenue opportunities to the company. The two entities share a history of working with regulated entities to create secure enterprise-grade solutions, and the acquisition allowed Ripple to expand its own enterprise offerings and provide its customers with the necessary technology to custody, issue, and settle any type of tokenized asset.
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