In partnership with Swiss digital asset firm Metaco, British-based financial services and banking company HSBC has announced that it will launch a custody service in 2024 for storing non-cryptocurrency blockchain-based assets.
The service, designed for institutional customers, follows last week’s announcement from HSBC that they successfully made tokens that represent physical gold in its London vault—and can be directly traded through the bank’s single-dealer platform software.
“Metaco Harmonize™ remains the market-leading institutional-grade digital asset custody and orchestration platform, uniquely fit for the stringent requirements of top-tier banks and global custodians as they seek to scale their pilots or experiments with tokenized assets into commercial offerings,” said Metaco CEO Adrien Triccani in a post on X.
Today, @HSBC , one of the world’s largest banking and financial services organisations, announced that it is working with @metaco_sa as it plans to launch a new digital assets custody service for institutional clients who invest in #tokenised securities. HSBC will be leveraging… pic.twitter.com/61VgZiz5S1
— Adrien Treccani (@AdrienTreccani) November 8, 2023
The announcement also follows HSBC’s 2022 reveal of HSBC Orion, a project under development that allows institutions to issue digital tokens. The partnership with Metaco, the technology company acquired by Ripple in September, will enable the development of the blockchain infrastructure required to issue and trade these digital assets.
Andrew O’Doherty, managing partner of web3 professional services firm gm3 and a former Global Head of Digitization in the Citi Securities Services business, is optimistic about this development. “Following the recent launch of Citi Token Services, it is a hugely encouraging development to see HSBC, another leading global custodian, continuously expand their product offerings in the digital assets space.
Facilitating the tokenization and custody of traditional financial instruments is a critical milestone on the blockchain adoption curve by the legacy banking system.
“The potential for atomic settlement and reduced operating overheads are some of the most exciting opportunities on the horizon,” he told nft now.
What sort of assets might be tradeable in this way? Alongside gold, it could be anything: bonds, real estate—or even fractionalized ownership in a company. With a secure and immutable blockchain acting as a source of truth, new trading strategies and even new markets can come to life.
It’s important to note that this does not mean that, say, cryptoadz will be traded directly on the stock exchange. To institutional investors, the benefits of blockchain technology—security, savings, authentication, decentralization—are much more important than flexing a high-value PFP NFT. But it’s still bullish for what we think of as the NFT space. “In the end, it’s good for the market in general. Attracts more attention, increases demand, all is good,” says Punk—and former corporate CFO and treasurer—Cryptoboomer.
To learn more: https://t.co/aI6IiaEvhu
— Metaco (@metaco_sa) November 8, 2023
Ripple recently fought a U.S. court case where the circuit judge ruled that XRP is not, in regulatory terms, classed as a security—which may have given it a strategic advantage in partnering with TradFi behemoth HSBC. Regulatory concerns will continue to play a pivotal role as these partnerships develop—which makes clarity even more important.
As blockchain technology is deployed in areas where it excels, even if they’re not as exciting to speculators, adoption will grow. “Big move for TradFi. Tokenization of assets has clear benefits for traditional assets. The biggest hurdles are custody and trust in the issuer. It is clear the banks are moving towards RWA tokenization. The winners will be the first movers,” says Stephen Cheung, general partner at WAGMi Ventures.