HSBC has partnered with Metaco, a technology firm owned by Ripple, to allow institutional investors to hold security tokens on its new custody platform.
The bank anticipates introducing the new digital asset custody service in 2024, in addition to its HSBC Orion digital asset issuance platform and HSBC offering for tokenized physical gold, which debuted on November 1, 2023. The firm stated that the services comprise a comprehensive digital asset offering for institutional clients of HSBC.
Tokenized securities, or security tokens, will be the focus of an institutional custody platform that HSBC, a major global banking institution, intends to introduce.
“These services demonstrate HSBC’s dedication to the advancement of digital asset markets as a whole,” John O’Neill, the global director of digital assets strategy for HSBC, stated.
The increasing demand for custody and fund administration of digital assets from asset managers and asset owners prompted HSBC to consider launching digital asset custody, according to Zhu Kuang Lee, chief of digital, data, and innovation at HSBC.
Lee emphasized that “this market continues to evolve” and that “there has never been a more critical time for asset servicers to innovate.”
The forthcoming digital asset custody platform for institutional investors will exclusively encompass security tokens, excluding cryptocurrencies such as Bitcoin and stablecoins like Tether, an HSBC spokesperson emphasized. Tokenized securities, instead of pure cryptocurrencies, are digital representations of issued and swapped securities on the blockchain.
For some time, HSBC has been recruiting personnel for its tokenized security division. As previously documented, in February 2022, HSBC was seeking an individual possessing specialized knowledge and skills in the domain of digital assets, specifically asset tokenization and custody.
Before investing in tokenized securities, HSBC has also ventured into the blockchain and cryptocurrency industries. In collaboration with Ant Group, a significant Chinese financial services provider, HSBC declared successful testing of tokenized deposits on November 1.
