HSBC plans next year to launch a custody service to store blockchain-based tokens representing traditional financial assets but not cryptocurrency or stablecoins, the bank said Wednesday.
HSBC will use technology from Swiss digital asset firm Metaco — which Ripple agreed to buy in May — to store bonds and other securities in a move meant to complement the bank’s Orion platform, which will issue digital assets, in addition to an offering launched last week that tokenizes gold.
“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,” Zhu Kuang Lee, HSBC’s chief digital, data and innovation officer for securities services, said in a statement seen by Reuters, Bloomberg and CNBC.
HSBC did not estimate the size of the market for blockchain-based assets excluding cryptocurrencies. But Ripple projected the crypto custody market for institutions could reach nearly $10 trillion by 2030, according to Bloomberg.
As it stands, data from CoinGecko pinpoints the value of all cryptocurrencies at around $1.4 trillion — a little less than half the market’s peak in late 2021.
The HSBC partnership reinforces, for Metaco, “continued momentum working with top-tier financial institutions,” the crypto firm’s CEO, Adrien Treccani, told CNBC.
“Financial institutions are ready to scale digital assets pilots to real use cases around custody, issuance, trading and settlement of tokenized assets, and in so doing, unlocking economic benefits and new revenue streams,” Treccani said.
Among U.S. banks of HSBC’s size, BNY Mellon has long championed digital asset custody, developing a multi-asset platform to hold, transfer and issue crypto on behalf of asset-management clients. Citi and State Street followed, establishing digital-asset units.
Citi, for its part, had been building a digital-asset custody offering in partnership with Metaco, but started informal talks this year with other providers, according to Bloomberg. State Street, meanwhile, ended a licensing agreement with crypto custody firm Copper in March. The bank’s inaugural digital asset chief, Nadine Chakar, left State Street for crypto firm Securrency in January. A second State Street Digital executive, Swen Werner, said in August that he, too, would leave the bank.
