- On November 8, HSBC announced a collaboration with Metaco, a technology company owned by Ripple Labs Inc., to develop secure custody services.
- HSBC is joining the growing list of major financial institutions that are increasingly adopting blockchain-based applications after years of testing the technology that underlies cryptocurrencies.
- Ripple predicts that the market for institutional cryptocurrency custody could grow to nearly $10 trillion by 2030, highlighting the significant potential in this sector.
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HSBC Holdings is partnering with Ripple’s Metaco for digital assets such as tokenized securities.
HSBC Forms a Partnership with Ripple’s Metaco
HSBC Holdings is partnering with Ripple’s Metaco company to offer custody services for digital assets like tokenized securities. In an announcement made on Wednesday, November 8, HSBC revealed plans to develop secure custody services through a partnership with Metaco, a technology company owned by Ripple Labs Inc. The service is expected to be operational by 2024 and will be offered to HSBC’s corporate clients.
This new service will strengthen HSBC’s digital asset issuance platform, HSBC Orion, and reinforce its recently launched system for tokenized gold. The system represents ownership of gold stored in the London vaults through digital tokens that use distributed ledger technology to represent ownership of physical gold.
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After years of testing the technology underlying cryptocurrencies, HSBC is now joining the ranks of major financial institutions embracing blockchain-based applications. JPMorgan Chase & Co. recently introduced a blockchain-based collateral settlement service for its clients, and Euroclear launched a platform for issuing traditional securities using blockchain technology.
It appears that more and more traditional players are showing interest in providing cryptocurrency custody services. Last week, Germany’s third-largest bank, DZ Bank, announced a similar service. DZ Bank will initially start offering custody services for assets like the Siemens crypto bond, acquired six months ago by Union Investment and DZ BANK. This move could enable these assets to be self-custodied. Deutsche Bank also launched similar services in September 2023.
Growing Demand for Digital Asset Custody
The increasing participation of institutional players in the digital asset market is driving the demand for custody services. Custody services, especially, have piqued the interest of major players in the industry and are providing opportunities for entrepreneurs.
However, this trend also underscores the challenges that smaller firms face when trying to collaborate with large financial institutions. Ripple, based in San Francisco, anticipates that the market for institutional crypto custody could grow to nearly $10 trillion by 2030, underlining the vast potential in this sector. On the other hand, banks and asset managers are investing millions of dollars in utilizing blockchain technology to simplify their complex processes and reduce costs.