HSBC is making a significant move in the financial industry by teaming up with Metaco, a decentralized finance (DeFi) firm owned by Ripple, to offer custody services for digital assets to institutional clients. This move is in response to the increasing demand from asset managers and owners for secure and efficient management of digital assets.
The bank plans to launch these services in 2024, aiming to stay at the forefront of the digital finance revolution. HSBC’s digital asset issuance platform, HSBC Orion, already represents ownership of physical gold stored in its London vault through digital tokens. The platform uses blockchain technology to tokenize physical gold.
The upcoming digital assets custody service will work alongside HSBC Orion, enhancing the bank’s digital asset infrastructure. This move by HSBC follows the footsteps of other major financial institutions like JPMorgan and Deutsche Bank, which have been exploring blockchain applications for commercial purposes.
Citigroup, another significant player in the financial industry, is also making strategic moves in the digital asset space. While it has an existing collaboration with Metaco, recent reports suggest informal discussions with alternative service providers, possibly influenced by Ripple’s acquisition of Metaco for $250 million.
HSBC began venturing into the cryptocurrency industry in December 2021 by partnering with Wells Fargo to use a blockchain platform for settling Forex transactions.
In the following year, HSBC made a noteworthy move by teaming up with The Sandbox, becoming the first global bank to step into the Metaverse. As part of the agreement, HSBC committed to buying virtual real estate, known as LAND, to connect with sports, esports, and gaming enthusiasts.
Looking ahead to September of this year, HSBC collaborated with the blockchain payment system FCF Pay. This partnership allows eligible clients to use various cryptocurrencies like Dogecoin (DOGE), Shiba Inu (SHIB), and XRP to pay their mortgage bills and loans.
HSBC’s entry into digital asset custody goes beyond expanding its product portfolio; it demonstrates the bank’s commitment to adapting to the changing financial landscape. Recognizing the growing role of blockchain technology and digital assets, HSBC aims to position itself as a go-to provider for secure and innovative digital asset services as institutional clients increasingly seek such solutions.
This development signifies a new era where traditional banking meets digital transformation. HSBC is taking the lead, ensuring its institutional clients are well-prepared for the evolving financial landscape ahead.
