HSBC Leverages Metaco From Ripple For Security Custody Token Launch

In a bid to establish a stance in the digital assets market, HSBC has partnered with Metaco, a subsidiary of Ripple, to launch a security token custody service. In addition to its recent introduction of tokenized physical gold offerings on November 1, 2023, and its current digital asset issuance platform, HSBC Orion, the bank plans to introduce a digital asset custody offering in 2024.

HSBC’s entry into the security token custody market is a component of its larger plan to embrace the banking industry’s digital transformation. The collaboration between the bank and Metaco, a Ripple subsidiary, demonstrates its dedication to using blockchain technology to improve services and maintain its leadership position in the financial innovation space.

The announcement follows HSBC’s February 2022 declaration of intent to enter the tokenization and custody of digital assets space.  Commenting on the development, John O’Neill, HSBC’s Global Head of Digital Assets Strategy, said the present move by the bank to establish itself in the digital asset markets niche underscores the bank’s commitment to the general development of the digital asset industry.

Proposed Digital Assets To Enhance HSBC’s Skills In Blockchain

In a statement released yesterday, the bank said HSBC’s digital asset offerings will benefit greatly from the security token custody service, which will further develop its skills in the blockchain and cryptocurrency industries. Helen Partz had written on the Cointelegraph platform that HSBC’s tokenized physical gold shows the bank’s dedication to incorporating blockchain technology into conventional finance.

It was also gathered that Ripple’s Metaco and HSBC have also proposed a partnership with Citygroup Inc. to provide digital asset storage services in the past. Citigroup was also said to have initiated an informal discussion with other digital assets providers earlier in the year.

Explaining the service, HSBC stated that its digital assets custody service plan doesn’t include storing stablecoins or any form of cryptocurrencies. It says the service will concentrate on tokenized securities by third-party platforms like the public blockchain, which are compatible with tokenized products or bonds.

HSBC Says There’s No Better Time For Digital Assets Integration Than Now

Finextra Research, in their recent report, said that HSBC’s involvement into the security token custody market marks a major turning point for the bank and highlights the financial sector’s general move toward adopting blockchain technology.

Finextra advised that as the landscape of digital assets develops, traditional banks are in a good position to use their knowledge and infrastructure to provide creative and safe blockchain-based solutions to their customers. It was also gathered that HSBC has long longed for a tokenized security division for some time.

News had it that the bank had announced it is looking for a partner since to establish its asset tokenization since February 2022. Further investigation into the bank’s attempt at asset tokenization reveals that it also announced its successful testing of tokenized deposits in partnership with Ant Group, a top Chinese financial services company.

Zhu Kuang Lee, head of digital, data, and innovation at HSBC, has said that HSBC’s request for digital asset custody is borne out of meeting up with the customer’s Increasing request for digital assets-induced fund administration and control. Lee also added that this market has continued to develop, saying there’s no better time in the bank’s history to innovate than now.