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HSBC to Offer Custody Services for Tokenized Securities
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HSBC Holdings plc (HSBC - Free Report) has announced its plan to offer custody service for storing blockchain-based tokens representing traditional financial assets, which excludes cryptocurrency.
The company revealed that the custody service, which is through a partnership with Swiss digital asset service provider Metaco, is expected to go live in 2024, enabling institutional clients to store tokenized securities.
The offering will complement the British-based bank’s platform, HSBC Orion, for digital assets issuance, which was introduced last year, as well as the bank’s latest move to issue tokenized physical gold maintained in its London vault.
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 a digital ledger composed of a data structure that keeps track of the ownership of tokens. It has not seen widespread adoption, but proponents of blockchain tech claim that it has the potential to make trading more transparent and seamless. So far, blockchain use cases have been focused on cryptocurrencies, which remain a relatively small part of the international financial system.
According to CoinGecko data, the value of all cryptocurrencies is nearly $1.4 trillion, a little less than half the market’s peak in late 2021.
In an effort to expand in this particular market, in 2019, HSBC announced the launch of Digital Vault, a platform that provides investors with digital access to records of securities purchased from private markets.
Over the past six months, shares of HSBC have declined 1.4% against the industry’s growth of 0.3%.
A few years ago, financial companies were not that interested in the crypto and digital asset space. However, after witnessing increased demand for the emerging market, banks and financial institutions are embracing digital assets.
To expand its exposure toward cryptocurrencies, Robinhood Markets, Inc. (HOOD - Free Report) has added wallet support for Bitcoin and Dogecoin.
Earlier, the HOOD wallet — a multi-chain, self-custody and Web3 wallet — was restricted to sending and receiving tokens built on the Ethereum blockchain only. However, as customers asked for more assets on more chains, Robinhood decided to expand its product offerings.
Citigroup Inc.’s (C - Free Report) securities solutions management unit, Securities Services, becomes the first digital custodian participant of BondbloX Bond Exchange (“BBX”). BBX is the world’s first fractional bond exchange.
BBX was rolled out in 2020 to simplify bond investing by enabling investors to track and trade bonds electronically. By fractionalizing full-sized bonds and introducing many benefits of equities trading to the bond market, the platform made bond trading more accessible to a broader range of investors. It now provides the provision of settlement and custodial services in the BBX market.
The partnership facilitates C’s clients to meet certain criteria to become BBX participants and instantly start trading bonds. Citigroup will provide seamless settlement and custody services at the back end and use the latest in distributed ledger technology in the partnership.
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HSBC to Offer Custody Services for Tokenized Securities
HSBC Holdings plc (HSBC - Free Report) has announced its plan to offer custody service for storing blockchain-based tokens representing traditional financial assets, which excludes cryptocurrency.
The company revealed that the custody service, which is through a partnership with Swiss digital asset service provider Metaco, is expected to go live in 2024, enabling institutional clients to store tokenized securities.
The offering will complement the British-based bank’s platform, HSBC Orion, for digital assets issuance, which was introduced last year, as well as the bank’s latest move to issue tokenized physical gold maintained in its London vault.
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 a digital ledger composed of a data structure that keeps track of the ownership of tokens. It has not seen widespread adoption, but proponents of blockchain tech claim that it has the potential to make trading more transparent and seamless. So far, blockchain use cases have been focused on cryptocurrencies, which remain a relatively small part of the international financial system.
According to CoinGecko data, the value of all cryptocurrencies is nearly $1.4 trillion, a little less than half the market’s peak in late 2021.
In an effort to expand in this particular market, in 2019, HSBC announced the launch of Digital Vault, a platform that provides investors with digital access to records of securities purchased from private markets.
Over the past six months, shares of HSBC have declined 1.4% against the industry’s growth of 0.3%.
Image Source: Zacks Investment Research
Currently, HSBC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Increased Competition in the Digital Asset Space
A few years ago, financial companies were not that interested in the crypto and digital asset space. However, after witnessing increased demand for the emerging market, banks and financial institutions are embracing digital assets.
To expand its exposure toward cryptocurrencies, Robinhood Markets, Inc. (HOOD - Free Report) has added wallet support for Bitcoin and Dogecoin.
Earlier, the HOOD wallet — a multi-chain, self-custody and Web3 wallet — was restricted to sending and receiving tokens built on the Ethereum blockchain only. However, as customers asked for more assets on more chains, Robinhood decided to expand its product offerings.
Citigroup Inc.’s (C - Free Report) securities solutions management unit, Securities Services, becomes the first digital custodian participant of BondbloX Bond Exchange (“BBX”). BBX is the world’s first fractional bond exchange.
BBX was rolled out in 2020 to simplify bond investing by enabling investors to track and trade bonds electronically. By fractionalizing full-sized bonds and introducing many benefits of equities trading to the bond market, the platform made bond trading more accessible to a broader range of investors. It now provides the provision of settlement and custodial services in the BBX market.
The partnership facilitates C’s clients to meet certain criteria to become BBX participants and instantly start trading bonds. Citigroup will provide seamless settlement and custody services at the back end and use the latest in distributed ledger technology in the partnership.