HSBC to Initiate Institutional Digital Assets Custody Service in 2024

HSBC Holdings plc has declared its strategic move into the digital asset sphere by announcing its intention to introduce a new digital assets custody service specifically for institutional clients. The service, anticipated to go live in 2024, will be designed to cater to the evolving needs of clients investing in tokenised securities.

The forthcoming custody service will operate in synergy with HSBC’s existing digital asset infrastructure, including the HSBC Orion platform, which is responsible for issuing digital assets, and the recently unveiled mechanism for tokenised physical gold. This suite of services is set to offer HSBC’s institutional clients a comprehensive ecosystem for their digital asset requirements.

To deliver this service, HSBC has partnered with Metaco, a Swiss-based enterprise technology firm. Metaco will integrate its Harmonize platform into HSBC’s digital custody service, ensuring a secure and unified management system for digital assets operations.

HSBC’s venture into digital custody services is a response to the burgeoning demand from asset managers and owners for sophisticated custody and fund administration for digital assets. This development is a part of HSBC’s broader digital, data, and innovation strategy headed by Zhu Kuang Lee.

The bank’s focused approach will be on security tokens, rather than cryptocurrencies such as Bitcoin or stablecoins like Tether, delineating a clear distinction in its digital asset services. Security tokens are essentially digital representations of securities issued and transferred on blockchain technology, a domain where HSBC has been actively scouting talent since early 2022.

This initiative by HSBC is indicative of the financial industry’s gradual but definitive shift towards integrating blockchain and digital assets into traditional banking frameworks.

HSBC’s foray into digital asset custody services for institutional clients reflects the bank’s commitment to digital innovation and its foresight in adapting to the digital transformation of the financial sector. The service, backed by HSBC’s robust platforms and in partnership with Metaco, is set to launch in 2024, signaling a significant move by one of the world’s largest financial organizations into the domain of tokenised securities.

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