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HSBC is the largest bank in Europe in terms of total assets.
Nicolas Economou | Nurfoto | Getty Images
HSBC announced Wednesday that it will offer custody services for tokenized securities, making the British bank the latest major institution to embrace digital assets.
HSBC uses technology from Swiss crypto custody company Metaco, which was recently acquired by blockchain startup Ripple, to store bonds and other securities.
In a press release, the bank said the service would complement its HSBC Orion platform for digital asset issuance, as well as a recently launched offering for tokenized physical gold.
HSBC will use Harmonize, Metaco’s platform for institutions, which “helps unify the security and management of digital asset operations,” according to the press release.
HSBC is the latest institution to embrace digital asset custody, after US banking giant BNY Mellon announced a similar move in 2021.
Tokenized securities are effectively regulated assets, such as bonds and shares, in the form of tokens issued on a blockchain.
A blockchain, in turn, can be thought of as a shared ledger on which assets are digitally recorded. The technology served as the foundation on which bitcoin was built, but its applications in banking are very different from those of bitcoin and other cryptocurrencies.
In the case of banks, these institutions use blockchain for payments, trading and other purposes, often without a digital token involved. Banks are finding utility in tokens by digitizing stocks, bonds and other assets.
HSBC is seeing “increasing demand for custody and fund management of digital assets from asset managers and asset owners as this market continues to evolve,” said Zhu Kuang Lee, chief digital, data and innovation officer for securities services at HSBC, in a statement. .
Metaco CEO Adrien Treccani told CNBC via email that the partnership strengthens “the continued momentum in working with top-level financial institutions.”
“Financial institutions are ready to scale digital asset pilots to real-world use cases around custody, issuance, trading and settlement of tokenized assets, unlocking economic benefits and new revenue streams.”
It marks another step by HSBC towards embracing digital assets. The bank, which holds about $3 trillion in assets worldwide, already lets its Hong Kong clients trade bitcoin and ether exchange-traded funds.
