HSBC (NYSE: HSBC) intends to introduce in 2024 a custody service for storing blockchain-enabled assets, which excludes cryptocurrency, the banking institution revealed on Wednesday.
The newly announced service, which is through a partnership with digital asset service provider Metaco, will enable financial institutions to store blockchain-powered tokens representing traditional financial instruments, as opposed to crypto or stablecoins, HSBC noted.
HSBC also mentioned this past week that it had made tokens representing physical gold maintained at its London vault. The banking service provider last year introduced a digital asset platform, HSBC Orion, which enables financial institutions to provide DLT-enabled versions of financial assets, also referred to as tokenised securities.
Zhu Kuang Lee, chief digital, data and innovation officer at HSBC, stated:
“We’re seeing increasing demand for custody and fund administration of digital assets from asset managers and asset owners, as this market continues to evolve.”
A blockchain is simply a data structure that takes the form of a digital ledger. The blockchain keeps track of the ownership of digital tokens. It has not yet seen widespread adoption, as compared to many TradFi services. However, the proponents of blockchain tech claim that it does have the potential to make trading more seamless and efficient.
So far, blockchain use cases have been focused on cryptocurrencies, which remain a small (and still insignificant) part of the international financial system. With the exception of Bitcoin (BTC) and Ethereum (ETH), the vast majority of crypto platforms have very limited real-world applications.
The value of all cryptocurrencies is about $1.4 trillion, down from a high of well over $3 trillion towards the end of 2021, according to CoinMarketCap and CoinGecko data.
HSBC has not yet provided a figure for the actual size of the market for blockchain-powered assets, excluding cryptocurrencies.
Banking institutions and other financial companies have invested billions into exploring use-cases for blockchain tech.