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Major global banking institution HSBC today announced a partnership with Metaco, a tech firm owned by Ripple, to introduce an institutional custody platform for tokenized securities.
The bank, which boasted a whopping $9.1 trillion in custody at the end of 2022, aims to launch the new service in 2024, in sync with its existing digital asset issuance platform, HSBC Orion, as well as the recently introduced gold tokenization solution.
According to Zhu Kuang Lee, chief digital, data, and innovation officer at HSBC, the move was fueled by the “increasing demand for custody and fund administration of digital assets from asset managers and asset owners.”
Tokenized securities are often based on blockchain technology and can be used to create digital versions of real-world assets, such as stocks, ETFs, or bonds.
Tokenized securities can also be created for other types of assets that can be securitized, for example, real estate, or even be used for raising capital—in such a scenario a company seeking to raise funds can decide to issue fractionalized ownership of their company through a digital token instead of issuing stock.
As part of its new service, HSBC is collaborating with Metaco, which was acquired by Ripple in May this year in a $250 million deal, and offers Harmonize, an institutional platform that enables secure and unified operations of digital assets.
“Metaco is excited to be working with HSBC as it continues to explore the applications of DLT in asset creation and custody,” Adrien Treccani, CEO and Founder of Metaco, said in a statement. “Custody infrastructure such as Metaco’s Harmonize, which integrates with financial institutions’ existing systems, will be critical to how issuers and investors interact, as capital markets and assets in general continue to be represented on distributed ledgers.”
Decrypt has reached out to HSBC and Metaco for additional comments and will update this article should we hear back.
The tokenization of securities is not a new venture for HSBC. Last week, the bank reported a successful trial of tokenized deposits with Ant Group, a leading Chinese financial services company.
Earlier this year, the Hong Kong division of HSBC launched Bitcoin and Ethereum ETFs tied to futures contracts that trade on the Chicago Mercantile Exchange (CME).
Edited by Liam Kelly.
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