HSBC, one of the largest banking institutions in the world, is set to innovate the traditional finance sector with its plan to introduce a new self-custody platform. This platform is designed to enable institutional clients to manage and hold blockchain-based tokens that represent traditional financial (TradFi) assets.
The bank is joining forces with Metaco, a Swiss company specializing in digital assets, to equip clients with the tools needed to store non-cryptocurrency assets, such as commodities, on a blockchain. A recent press release has unveiled that HSBC has already taken a significant step in this direction by creating tokens that are tied to its gold reserves housed in a London vault.
Zhu Kuang Lee, HSBC’s Chief Digital, Data and Innovation Officer, recognizes a growing interest in the digital representation of assets among asset managers and owners. He asserts that the partnership with Metaco is geared towards establishing a cutting-edge custody infrastructure that is both scalable and secure, acknowledging the critical timing for asset servicers to engage in innovation and collaboration to drive transformation in the market.
In a move to provide a holistic digital asset service to institutional clients, HSBC is looking to align this new custody service with HSBC Orion, their proprietary platform for issuing digital assets, which was launched last year. This alignment is anticipated to deliver a comprehensive suite of digital asset offerings.
While HSBC has not disclosed the extent of the demand for this novel category of non-cryptocurrency blockchain-based assets, the bank has clearly indicated its commitment to the digital asset space. This is further exemplified by the launch of trading services for Bitcoin and Ethereum exchange-traded funds (ETFs) catered to institutional clients earlier in the year.
HSBC’s advancement into blockchain-based custody solutions represents a significant fusion of traditional finance with blockchain technology, reflecting a strategic pivot towards embracing digital transformation within the banking industry.