HSBC To Partner With Ripple's Metaco For A Tokenized Securities Custody Service

HSBC Holdings HSBC looks to launch an institutional-grade custody service for tokenized securities.

What Happened: HSBC will soon offer a custody service for its digital assets like tokenized securities to its institutional clients, according to The Block. It will associate with Metaco, a Ripple Labs-owned technology form, for safekeeping services.

The service which will use Metaco’s Harmonize solution will go live in 2024.

Also Read: HSBC Reportedly Partners With Fireblocks Amid US Crypto Regulatory Turmoil

Tokenization will include tokenized securities issued on third-party platforms like private and/ or public blockchain-compatible tokenized bonds or tokenized structured products.

Metaco Harmonize is the institutional-grade digital asset custody platform that fits the top-tier banks and global custodians' requirements. The platform will enable financial institutions to build the infrastructure that will assist in scaling their pilots or experiments with tokenized assets.Ripple acquired Switzerland-based Metaco in May 2023 for $250 million as it estimated that the crypto custody market for institutions alone could reach around $10 trillion by 2030.       

Why It Matters: Custodial services demand is on the rise with banks and financial institutions bringing a range of real-world assets (RWA) onto blockchains.

Not only does this new offering complement HSBC’s platform for digital asset issuance, called HSBC Orion, but also the bank’s system to issue tokenized gold was launched last week. The tokenized gold uses distributed ledger technology to represent ownership of physical gold held in its London vault through digital tokens.

Meanwhile, Citigroup also initiated a digital-assets custody offering in partnership with Metaco. However, in early 2023 it started informal talks with other providers and in June it announced that it is reviewing its partnership with Metaco.  

JPMorgan Chase & Co., though its JPM Coin, and Deutsche Bank recently commercialized blockchain applications with the latter partnering with Swiss fintech firm Taurus for developing digital asset custody and tokenization services.

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