HSBC to round out tokenization offering via custody play

HSBC is getting set to offer digital assets custody services to institutional investors just a week after enabling the ownership of tokenized gold.

The London-based company’s upcoming capability would allow for the safe-keeping of tokenized securities — such as bonds and other products — issued on third-party platforms.

The offering, which would not custody other crypto assets or stablecoins, is expected to go live in 2024, the company said Wednesday.

HSBC is for now steering clear of custodying crypto assets beyond tokenized securities as such currencies remain “to a large degree unregulated,” a person familiar with the matter told Blockworks. 

The financial giant is set to collaborate with custody infrastructure firm Metaco, whose Harmonize product was launched in 2021 to help institutions with tokenization, crypto custody and smart contract management.

Harmonize integrates with the existing systems of financial institutions, Metaco CEO Adrien Treccani said in a statement — adding it will be a critical tool “as capital markets and assets in general continue to be represented on distributed ledgers.”

The upcoming launch comes as asset managers have shown an increased appetite for digital assets custody and fund administration, according to HSBC. 

More companies have embraced tokenization as financial leaders — such as BlackRock CEO Larry Fink — have touted the opportunity such versions of securities present, including driving efficiencies and increasing access.   

Various projects have sought to offer easier access to the yields of US Treasury securities, for example.

Read more: TradFi, DeFi convergence continues through tokenizing real-world assets 

John O’Neill, HSBC’s head of digital assets strategy, noted in a statement that the upcoming custody service highlights its “commitment to the overall development of digital asset markets.”

The firm revealed its intention in November 2022 to launch tokenization platform HSBC Orion — on which institutions can issue digital bonds. The firm said last week that tokenized physical gold — held in HSBC’s London vault — can now be traded between HSBC and institutional investors through the HSBC Evolve platform.

An HSBC spokesperson did not comment on what other crypto-related capabilities the bank could seek to offer going forward.

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