HSBC is opening its custody services for tokenized securities in 2024. The future offering of the British bank is powered by Swiss digital asset custody firm Metaco.
HSBC’s Press Release
According to a press release, the new service of HSBC tailored for institutional clients will employ Metaco’s platform for institutions called “Harmonize.” The aim of the collaboration is to “help unify security and management of digital asset operations.” The Harmonize solution complements the HSBC Orion personalized for tokenized gold issuance.
Metaco points out that the use of digital ledger technology (DLT) in banks differs from the way Bitcoin (BTC) and other cryptos utilize them. The firm’s next-gen custody infrastructure is designed to enhance the scalability and security of payments, trading, and other services even without digital tokens. On the other hand, the application of tokenization allows them to digitalize equities, bonds, and other assets, which could essentially magnify revenue streams and provide more economic advantages.
HSBC Chief Digital, Data and Innovation Officer, Security Services Zhu Kuang Lee said that they recognize the growing demand for custody and fund administration of digital assets from asset managers and asset owners as the market continues to evolve. Meanwhile, Metaco CEO Adrien Treccani’s statement via email says that the move reinforces their “continued momentum working with top-tier financial institutions.”
Ripple Takes a Market Boost
Metaco was acquired by Ripple back in May 2023 for $250 million, making the latter the sole shareholder of the company. This event allowed the giant crypto firm to increase its international market presence amid the growing scrutiny of the US Securities and Exchange Commission (SEC) for crypto-related entities in the fallout of the FTX debacle.
The new venture also elevates Ripple’s exposure in traditional finance (TradFi), which eventually got it in the crosshairs of HSBC. Furthermore, Citigroup is reportedly on its way to developing its own custody services for digital assets of Metaco after inking a partnership in June.
Ripple President Monica Long believes the string of progress made by Ripple in expanding its reach in the crypto custody space positions it to tap into a $10 trillion share in the market by 2030.
Final Thoughts
As of this year, HSBC manages $3 trillion in assets worldwide. The bank already lets clients in Hong Kong transact in Bitcoin and Ethereum (ETH) exchange-traded funds. The expansion of the institution towards tokenized security custody is expected to buff its value.