HSBC Looks To Broaden Tokenized Asset Offerings after Gold Token Launch

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

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April 15, 2024 03:05 EDT

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HSBC, one of the world’s largest banking services, intends to broaden its array of tokenized assets. CEO Noel Quinn said the bank will ensure these offerings are firmly anchored in reality, the South China Morning Post reported Monday.

However, the bank intends to steer clear of volatile cryptocurrencies in tokenizing assets.

During a roundtable discussion held last week in Hong Kong, Quinn reportedly said tokenization has the potential to encompass a wide range of assets. But his primary focus remains on ensuring the underlying value of the token itself.

Tokenization of digital assets involves transforming the ownership rights of a real-world asset into a digital token. This token can then be owned, sold, and traded on a blockchain. It involves turning ownership rights into digital tokens stored on a decentralized ledger system.

HSBC Uses Orion Platform for Secure Retail Gold Tokenization

In a move to explore the potential of digitalized real-world assets, HSBC debuted a retail gold token in March. This initiative marked the first instance where HSBC leveraged its private blockchain technology for everyday investors. The bank’s digital asset platform, Orion, serves as the foundation for this gold token.

According to Quinn, tokenization offers significant advantages over traditional trading methods. He cited its efficiency, cost-effectiveness, and overall improvement from the old ways.

He emphasized the bank’s commitment to exploring further applications of this technology, but with a focus on assets with inherent value, described as “backed by something real.” Quinn acknowledged that while cryptocurrencies use similar technology, they carry inherent volatility and have an unpredictable nature.

Hong Kong Government Completes $750M Digital Bond Offering

Hong Kong has positioned itself as a leader in adopting tokenization. The Securities and Futures Commission (SFC) said in November that it would consider providing regulatory approval for the tokenization of securities and regulated funds. This framework allows for the issuance of blockchain-based tokens that represent ownership interests in various investment products.

The Hong Kong government last month successfully completed a multicurrency digital bond offering, valued at about $750 million. This issuance leveraged HSBC’s Orion platform operated by the central bank’s Central Moneymarkets Unit (CMU).

HSBC has highlighted the efficiency gains achieved through this, saying settlement times for issuance have been reduced from five days to just one day, while secondary market trading and coupon payments are also streamlined.