On Wednesday, HSBC made known its new venture offering custody services for the safeguarding of tokenized securities and digital assets that take the form of regulated securities, such as bonds. This decision follows the example set by US banking giant BNY Mellon last year that also declared its commitment to digital asset custody. HSBC has observed a growth in requests from asset owners and managers seeking custody and fund administration services for digital assets as this market continues to develop.
On Wednesday, HSBC unveiled that it will be providing custody services for tokenized securities, making the British bank the newest major institution to embrace digital assets.The service is being powered by technology from Metaco, a Swiss crypto custody firm recently acquired by blockchain startup Ripple. This offering will join the bank's other digital asset services, such as their Orion platform for issuing digital assets and their newly launched tokenized physical gold product.HSBC will be utilizing Metaco's Harmonize platform which consolidates the protection and administering of digital asset operations.This development follows the U.S. banking giant BNY Mellon embrace of digital asset custody. Tokenized securities are regulated assets like bonds and equities, in the form of tokens operating on a blockchain, which can be considered a shared ledger where assets are digitally recorded.The technology behind blockchain has many applications in the banking world that vary from those of bitcoin and other cryptocurrencies. Banks are utilizing the technology for payments, trading, and a host of other tasks, which may or may not include digital tokens.As HSBC Securities Services Chief Digital, Data & Innovation Officer Zhu Kuang Lee explains, "we are seeing increasingly more demand for custody and fund administration of digital assets from asset managers and asset owners, as this market continues to develop."Adrien Treccani, Metaco CEO, informed CNBC via email that this partnership serves to "reinforce continued impetus working with top tier financial institutions." He went on to say, "Financial organizations are ready to transition digital assets pilots to real-world use cases around custody, issuance, trading, and settlement of tokenized assets, and in doing so, unlock economic benefits and new income sources."It is a further step forward in HSBC's adoption of digital assets. The bank, which holds around $3 trillion in assets worldwide, has already permitted their Hong Kong customers to trade bitcoin and ether ETFs.
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