HSBC Holdings, a leading bank, will soon start offering digital asset custodial services. These services will handle assets like tokenized securities. However, they declared their collaboration with Metaco, a tech firm under Ripple Labs Inc., on November 8. They aim to create safe custody services that should be ready by 2024. They intend to offer these services to their institutional clients.
However, HSBC’s new service will improve its digital asset issuing platform, HSBC Orion. This platform also includes a system for tokenized gold. Launched recently, this system uses distributed ledger technology. This tech represents the ownership of real gold stored in the bank’s London vault through digital tokens.
HSBC is moving with the trend by adopting blockchain-powered apps, like other big fish in the financial pond. After trying it out for years, banks like JPMorgan Chase & Co. are implementing blockchain services for clients.
Take, for instance, JPMorgan’s recent innovation—an asset settlement service built on blockchain. Euroclear did something similar, providing a platform for old-school securities via this cutting-edge technology.
Crypto Custody Takes Center Stage With HSBC & Deutsche Bank
There’s a buzz in the financial world toward crypto custodial services. Look at DZ Bank in Germany; it is currently the third biggest. They’re throwing their hat in the ring with a new offering. They aim to serve crypto securities, debuting with a Siemens crypto bond.
This bond gained traction with Union Investment and DZ BANK half a year back. This move opens the possibility of investors taking custody of these digital securities. And it’s not just DZ Bank—Deutsche Bank also started offering similar services as of September 2023.
The digital assets market is witnessing an increase in institutional players. Naturally, this means the need for custodial services is on the rise, too. These services especially are attracting significant attention from major industry members, offering chances for sector startups.
However, this also underlines the difficulties encountered by small firms when they aim to work with large financial operations. Situated in San Francisco, Ripple has speculated that the market for institutional crypto custody could potentially balloon up to around $10 trillion by 2030. This underscores the immense possibility within this domain.
Meanwhile, investment from banks and asset managers into blockchain has been hefty, counting in the millions of dollars. The end goal? To streamline their intricate procedures and lower costs.
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The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.
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