HSBC expands tokenized asset strategy following successful gold token introduction

One of the major global banking institutions, HSBC, has a strategy to grow its range of tokenized assets. The South China Morning Post reports that CEO Noel Quinn stressed the bank’s desire to make these new offerings in line with the ‘real world.’ Though the bank has researched tokenization, the bank wants to dissociate itself from the volatility that characterizes cryptocurrency.

During a discussion in Hong Kong, Quinn underlined the potential of tokenizing a wide range of assets, with the focus of the tokens on their tangible value. Tokenization is the process of transforming the ownership of a physical asset into a digital token, enabling its ownership, sale, and exchange on a blockchain platform, hence digitizing rights into tokens within a decentralized ledger system.

HSBC Rolls Out Orion Platform for Retail Gold Tokenization Security

HSBC took a pioneering move in digitizing physical assets and launched their initial retail gold token in March. This project is the first use of HSBC’s own blockchain technology for the general investing public. The bank’s Orion digital asset platform serves as a backbone for the gold token initiative. Quinn has listed innumerable advantages of tokenization, noting it as effective, cost-efficient, and possessing more contemporary features than traditional trading practices.

He emphasized the bank’s commitment to exploring new applications for the technology, focusing on assets having inherent value, which he called “backed by something tangible,” and pointed out that cryptocurrencies use similar technology but the former is inherently volatile and unpredictable.

Hong Kong has become one of the leaders in the adoption of tokenization. In November, the Securities and Futures Commission (SFC) declared that it was prepared to grant tokens the status of securities and regulated funds. This method implies issuing blockchain-based tokens that represent ownership in different investment vehicles. Hong Kong government performed a digital bond issuance in varied currencies worth about $750 million last month using HSBC’s Orion platform, managed by the central bank’s (CMU) Central Moneymarkets Unit.

HSBC has noted considerable efficiency gains from this initiative, with the time for issuance settlement being reduced from five days to one day. In addition, the settlement process and coupon distribution for the secondary market transactions had been simplified.