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HSBC to launch tokenized securities custody services

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HSBC is the largest bank in Europe in terms of total assets.

Nicolas Économou | Nuphoto | Getty Images

HSBC On Wednesday, it announced it would offer custody services for tokenized securities, making the British bank the latest major institution to embrace digital assets.

HSBC uses technology from Swiss cryptocurrency custody company Metaco, 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 issuing digital assets, as well as a recently launched offering for tokenized physical gold.

Metaco will use HSBC’s Harmonize, the bank’s institutional platform, which “helps unify the security and management of digital asset operations,” according to HSBC.

HSBC is the latest institution to adopt digital asset custody, after US banking giant BNY Mellon announced a similar move in 2021.

Tokenized securities are effectively regulated assets, like bonds and stocks, in the form of tokens issued on a blockchain.

In turn, a blockchain 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 the banking world are very different from those of Bitcoin and other cryptocurrencies.

In the case of banks, these institutions leverage blockchain for payments, trading, and other purposes, often without a digital token involved. Banks find utility in tokens by digitizing stocks, bonds and other assets.

HSBC “sees growing demand for digital asset custody and fund administration from asset managers and owners as this market continues to evolve,” said Zhu Kuang Lee, head digital, data and innovation for securities services at HSBC, in a press release. .

Adrien Treccani, CEO of Metaco, told CNBC via email that the partnership strengthens “the continued dynamic of collaboration with leading financial institutions.”

“Financial institutions are poised to expand digital asset pilots into real-world use cases around the custody, issuance, trading and settlement of tokenized assets, and in doing so, unlock economic benefits and new sources of income.

This marks another step by HSBC towards the adoption of digital assets. The bank, which has around $3 trillion in assets worldwide, already allows its Hong Kong clients to trade exchange-traded funds in bitcoin and ether.

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