• HSBC plans to offer digital asset custody services for institutional clients.
• The bank will offer the custody services in collaboration with Metaco, a DeFi firm owned by Ripple.
• The custody services will complement HSBC’s existing digital asset issuance platform, HSBC Orion.

HSBC Holdings Plc is gearing up to make a significant move in the financial industry by offering custody services for digital assets to institutional clients.

In a strategic partnership with Ripple-owned decentralized finance (DeFi) firm Metaco, the global banking giant is set to provide solutions tailored to the evolving landscape of digital finance.

HSBC’s plan

HSBC’s foray into digital asset custody is a response to the rising demand from asset managers and owners for secure and efficient management of digital assets.

These services are anticipated to become operational in 2024, aligning with the bank’s vision of staying at the forefront of the digital finance revolution.

HSBC Orion, the bank’s digital asset issuance platform, already symbolizes ownership of physical gold stored in its London vault through digital tokens. The platform tokenizes physical gold using blockchain technology.

The forthcoming digital assets custody service will work in tandem with HSBC Orion, broadening the scope and robustness of the bank’s digital asset infrastructure.

Blockchain adoption in the finance industry

HSBC’s move follows the lead of other major financial institutions, including JPMorgan and Deutsche Bank, which have been actively exploring blockchain applications for commercial purposes. JPMorgan’s JPM Coin payment system, for example, is processing a daily transaction volume of $1 billion.

Notably, Citigroup, another prominent financial institution, is also making strategic moves in the digital asset space. While Citibank has an existing collaboration with Metaco, recent reports suggest that it is engaged in informal discussions with alternative service providers. This may be influenced by Ripple’s acquisition of Metaco for $250 million, highlighting the competitive dynamics in blockchain adoption among financial giants.

HSBC’s entry into digital asset custody is more than just an expansion of its product portfolio; it represents the bank’s commitment to adapting to the changing financial landscape. It acknowledges the growing role of blockchain technology and digital assets in the future of finance.

As institutional clients increasingly seek secure and innovative digital asset services, HSBC is positioning itself as a go-to provider, aligning its trajectory with the pulse of a digital-first financial ecosystem. The banking giant’s upcoming digital asset custody service is a bold declaration of its vision for a future intertwined with blockchain innovation.

This development signifies a new era where traditional banking meets digital transformation, and HSBC is setting the pace, ensuring its institutional clients are well-equipped for the journey ahead.